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Projected or estimated financial statement that attempts to present a reasonably accurate idea of what a firm's financial situation would be if the present trends continue or certain assumptions hold true. Pro forma statements are used routinely in preparing 'what if' scenarios, formulating business plans, estimating cash requirements, or when submitting financing proposals. Also called projected statement.
A financial statement prepared on the basis of some assumed events and transactions that have not yet occurred.
Pro forma statements are used for a full range of financial analysis and should be created at the beginning of every financial planning cycle or whenever an organization is considering a step that could have a significant financial impact. They are often examined when a company is contemplating a merger, new financing (debt, stock, institutional subsidy, or external grant), capital investment in plant or other fixed assets, expanding production, launching a new product line, or any other situation with important financial implications. A university press most often uses proforma statements in connection with its annual operating budget and long-term financial planning process. Budgets and multi-year financial plans usually contain pro forma income statements and balance sheets to summarize financial performance for given time periods and financial conditions for given dates.
