pro forma financial statement


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Pro Forma Financial Statement

A financial statement that a company prepares to consider the effects of a potential activity. For example, if a company is considering acquiring another, it may prepare a pro forma financial statement to estimate what effect the acquisition would have on its own financial circumstances. A pro forma financial statement can be part of the risk analysis of a situation. See also: Due diligence.

pro forma financial statement

A financial statement constructed from projected amounts. A firm might construct a pro forma income statement based on projected revenues and costs for the following year. Likewise, a firm may wish to develop a set of pro forma statements to determine the effect of a projected stock buyback.
References in periodicals archive ?
Of course, Pro Forma Financial Statements also provide other important benefits.
Once your Q4 and annual column balance, your Cash Budget is done and you're ready to create the Pro Forma Financial Statements.
Future installments of this budgeting series will include a brief discussion of each of the budgets used in a Master Budget: production, including direct materials, direct labor, and manufacturing overhead budgets; ending inventory budgets; selling and administrative budgets; a cash budget; and pro forma financial statements, including a Balance Sheet, Income Statement, and Statement of Cash Flows.