#Pro forma income statement template word pro#
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. Let’s take a look at each report in the set and why management would choose to create a pro-forma version. Pro forma financial statements can be prepared separately or in a set like general-purpose financials. If their growth projections are based on landing a new client or project, they might include an estimated income statement to show the effects of the new project on the bottom line. For instance, management usually talks about the growth of the company in the management discussion and analysis section of the annual report. These reports are typically used for internal planning purposes, but many companies do issue them to the public for speculative purposes. What would the cash flow statement look like if this happened? Management is trying to figure out what the business looks like if a business event happens in the future by starting with standard report and adjusting it for the new projections. You can think of it as a “what if” financial statement. Instead, it’s a tool created by management to help project future performance and plan future events.
In other words, it’s not an official GAAP statement issued to investors and creditors to relay information about past company performance. A pro forma financial statement is a report prepared base on estimates, assumptions, or projections.