Pro Forma

Pro Forma

A Latin term meaning "for the sake of form". In the investing world, it describes a method of calculating financial results in order to emphasize either current or projected figures.

Notes:

Pro forma financial statements could be designed to reflect a proposed change, such as a merger or acquisition, or to emphasize certain figures when a company issues an earnings announcement to the public.

Investors should heed caution when reading a company's pro forma financial statements, as the figures may not comply with GAAP. In some cases, the pro-forma figures may differ greatly from the those derived from generally accepted accounting principles.

See also: Annual Report, Earnings, Generally Accepted Accounting Principles - GAAP, Goodwill, Pro-Forma Earnings