For example, if the company is considering a merger, a pro forma income statement. This is the second section of your pro forma financial statement. This occurs because the proforma income statement is designed to display what the propertys financial data such as revenue and expenses become during any specific year over the. How to create a pro forma income statement businesstown. Consider how each item on that statement can or will be changed during the coming year. Remember, its future cash flow that determines value. While that description is accurate, its more useful to think of the pro forma as a combined and simplified income statement and cash flow statement. The difficulty in comparing pro forma statements with gaap statements is that it is up to the companys discretion which expenses get included or left out of the pro forma statement. This method of income measurement, the transaction approach, focuses on the income. Pro forma financial statements with templates and examples. The income statement summarizes these transactions. A pro forma income statement basically looks similar to the conventional income statement. Financial forecasting pro forma financial statements. This chart of accounts will make up the pro forma statement.
In this example, you would multiply all of last years income statement line items by 1. How to build pro forma financial statements that wow investors. Pro forma income statement is the statement prepared by the business entity to prepare the projections of income and expenses which they. The only difference between pro forma income statement and income statement is, the income statement is about past results, whereas the pro forma income statement is a projection of the existing income statement. Pro forma income statement is the statement prepared by the business entity to prepare the projections of income and expenses which they expect to have in the future by following certain assumptions such as competition level in the market, size of the market, growth rate, etc. An income statement is the same as a profit and loss statement, a financial statement. A pro forma income statement shows what potential sales revenue, expenses, taxes and depreciation might look like. According to the three sections of the statement, there are a variety of aspects that need to be taken into consideration.
Pro forma financial statement community futures centre west. The template requires inputs from the income statement and balance sheet from the past 5 years. You may use the complimentary supplied spreadsheet template to create the financial statements or create your own. Simply put, its a future or projected income statement, or it can even be used to restate financial books in an unofficial way. This portion of the pro forma statement will project your future net income, sale of assets, dividends, issuance of stocks, etc. To create a pro forma income statement, work from your current income statement and try to predict the future changes.
The pro forma income statement and pro forma statement of comprehensive income for the year ended. Many times they will have a budget that is usually inconsistent with their historical performance but havent done the work to take the budget one step further and have it flow. The proforma income statement is a proven method real estate investors use to evaluate a rental income propertys future financial performance over time. How to do a pro forma statement pacific crest group. Gaap is considered the official profitability statement, as every liability and income stream is accounted for on a gaap financial statement. View the latest tsla financial statements, income statements and financial ratios.
Creating proforma financial statements for your cannabis. A pro forma income statement is a set of financial reports based on a projected assumption of a company or businesss income. Sit down with an income statement from the current year. A pro forma operating statement is a projected budget on an income property for the next twelve months. According to your pro forma annual income statement. A proforma income statement should be an assess for current financial status thoroughly. Proforma income statement describes financial statement having hypothetical amounts. Using pro forma templates can save you valuable time when creating your own pro forma income statements. A pro forma statement is a prediction, and a budget is a plan. Proforma income statement proforma income template. Pro forma statements typically only forecast operating items on the income statement. Then, ive projected out the next 10 years of my companys income.
The commonsize statement is available in pdf format to display all the line items as well as percentages of the common figure or selected items. Pro forma financial statements leeds school of business. Also called the profit and loss statement, the income statement. Pro forma income statements, balance sheets, and the resulting statements of cash flow are the building blocks of financial planning. The word format income statements are very easy for people to analyze the expenses of a company as well as compare with their peers. Arguably the single most important document in any commercial loan package is the pro forma operating statement. December 31, 2012 and for the three month period ended. Work the arithmetic through to the bottom to complete a pro forma income statement. Your budget may be based on what your pro forma statements sayafter all, it makes sense to make plans based on your predictions. Create a pro forma income statement by using the calculated percentage change in sales. A pro forma income statement a projected income statement. My personal pro forma financial statement goes back five years and displays all of the income ive earned and the expenses ive incurred.
How to create a pro forma balance sheet businesstown. How to prepare a pro forma operating statement for an apartment building. The income statement is probably the most commonly pro forma ed financial statement because management, investors, and creditors all want to see what happens to profits if certain business deals take place in the future. Also, using these financial statements, investors can spot all trends. Income statements can be complicated or simple, but a lot of it depends on the size of the operating firm. The income statement reflects the earnings of the firm. These statements are the complete set of financial reports issued by an entity, reinforce.
The beauty of using an excel template for a profoma income projection, is that the data is completely interchangeable, and easytomanipulate. Pro forma income statements provide an important benchmark or budget for operating a business throughout the year. Because it helps to present and project the changes that have impacted the companys financial position shown in different aspects of the financial statement. There are various templates available on the internet, but some of the proforma income statements have some. A presentation of data, typically financial statements, where the data reflects the world on an as if basis. A pro forma income statement is a projected income statement. What financial statement lists assets from current to long term.
A proforma forecast is a financial forecast based on pro forma income statements, balance sheet or cash flows. How to prepare a pro forma operating statement for an. Companies often use pro forma income statements to forecast what may happen in anticipation of an event. When a company experiences or is expected to experience significant financial changes the need to prepare a pro forma statement arises. Pro forma balance sheets are used to project how the business will be managing its assets in the future. Youre using a spreadsheet to create pro forma financial statements.
Pro forma statements for each plan provide important information about future expectations, including sales and earnings forecasts, cash flows, balance sheets, proposed capitalization, and income. A pro forma income statement is based on projections or possibilities. The four financial statements of critical value in this text are as follows. When making these forecasts, revenues will usually. A pro forma balance sheet is similar to a historical balance sheet, but it represents a future projection. Pro forma statements provide organizations with an estimation of future financial performance. An income statement is just one of the many documents included in a financial statement, which also includes other financial reports like the balance sheet and cash flow statement. It requires simple financial statements inputs from the past 5 years and will automatically generate all the necessary pro forma financial statements. It requires simple financial statements inputs from the past 5 years and will automatically generate all the necessary pro forma financial statements projections outputs. These statements are the complete set of financial reports issued by an entity, reinforce assumptions, or speculative conditions about events that may have happened in the past or which may happen later on in the future. Format of the income statement elements of the income statement net income results from revenue, expense, gain, and loss transactions.
1119 685 1435 1262 73 1445 1184 609 1073 553 991 533 1093 698 906 1284 179 1230 638 642 566 10 367 1381 107 662 295 1115 576 155 1442 1009 1219 1425 103 134 1372