Fun Info About Pro Forma Income Statement Definition

In the online course financial accounting, pro forma financial statements are defined as “financial statements forecasted for future periods.

Pro forma income statement definition. The pro forma income statement is a document that is a way to show your company's income if you exclude some costs. As in, “what if my business got a $50,000 loan next year?” It is a budget or projection of what a business might expect its future revenues, expenses, and profits to be.

Pro forma cash flow statements; The result is a full year pro forma statement that reflects the estimates for the full year. They may also be referred to as a financial forecast or financial projection.”

Regular income statements, sometimes called statement of financial performance, are exacting, in that they reflect the exact income figures your company had in past years. Operating income of $1.09 billion, a 6% increase compared to the prior year; Pro forma financial statements are hypothetical financial reports that project the future financial performance of a company, based on expected income, expenses, assets, and liabilities.

This type of financial statement has the following characteristics: Pro forma means “for the sake of form” or “as a matter of form. when it appears in financial statements, it indicates that a method of calculating financial results using certain projections. Pro forma statements are used to analyze the financial impact of a major business decision.

A pro forma income statement uses a calculation method designed to attract potential investors or to gauge potential earnings from certain business decisions, like mergers or acquisitions. All of these statements and reports can be prepared on a pro forma basis. In financial accounting, pro forma is used for invoices, budgeting, and financial statements.

The main components of a pro forma income statement include: These statements typically also use historical data about the organization's financial performance and extrapolate that data to help with projections. A pro forma income statement would show how the company’s revenues and expenses might change and ultimately affect company profits.

Pro forma financial statements are financial reports issued by an entity, using assumptions or hypothetical conditions about events that may have occurred in the past or which may occur in the future. View the pdf for the full press release and financial statements. Management can also simply roll financials over from one year to the next and alter the pro formas slightly for planning purposes.

Pro forma statements typically only forecast operating items on the income statement such as sales and ebit, and not any items generated by financing or investing flows. The claimed rationale should include the current income and the general schedule that follows the bill payment. The term 'pro forma' means an estimate or forecast of a financial statement.

Gaap eps of $6.71 and pro forma eps (1) of $5.59, representing 9% growth in pro forma eps over the prior year; A pro forma income statement shows what potential sales revenue, expenses, taxes and depreciation might look like. The documents are often used to express interest in business transactions or reveal the intended purpose and outcome of the transaction.

Pro forma financial statement definition essentially, pro forma financial statements are financial reports based on hypothetical scenarios that utilize assumptions or financial projections. Through the net income equation , one can determine their bottom line and how much funds they have to carry over to the next period. What is a pro forma income statement?