pro forma

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Pro forma

A financial projection based on assumptions. Also, refers to a statement of income and balance sheets that exclude non-recurring items.

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

prescribing a set form or procedure. For instance, a pro forma invoice may be sent to a customer in advance of a transaction to facilitate paperwork, or a pro forma projected SOURCES AND USES OF FUNDS STATEMENT may be constructed to show the bank manager the anticipated future financial situation as a basis for negotiating a short-term LOAN.

pro forma

See pro forma statement.

References in periodicals archive ?
Explain why investors should care about the pro forma--For investors to properly evaluate pro forma measures, they have to understand its purpose, so it's important that management provide investors with a rationale for the use of these measures (i.e.
Provide a reconciliation--To understand the nature of the pro forma measure, it's important that investors recognize exactly how it differs from GAAP earnings.
Prepare pro forma on a consistent basis--To allow for a meaningful comparison of results over time, it's important that management determine pro forma earnings on a basis consistent with prior periods, or explain any changes in the composition of the pro forma earnings measure.
Note that contrary to this best practice recommendation, Inco Limited's 2003 release provides greater prominence to its pro forma measure, both by placing it prior to GAAP earnings, and discussing it in greater depth.
Managers have argued that pro forma earnings measures provide such value relevant information to investors, allowing them to better evaluate firm performance.