Brilliant Pro Forma Budget Definition

These statements are used to present a view of corporate results to outsiders perhaps as part of an investment or lending proposal.

Pro forma budget definition. Its a tool that business owners decision-makers stakeholders investors creditors and others use to examine hypothetical conditions. At times conditions recommend creating multiple pro forma budgets based on potential revenue increases or decreases andor possible changes in expenses. Pro forma financial statements simply refer to a set of financial statements balance sheet income statement and cash flow statement which have been prepared in order to show the effects of a specific transaction on the historical financial statements.

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. In the world of accounting and investing pro forma refers to a method by which firms calculate financial results using certain projections or presumptions as pro forma financial statements. In contrast the purpose of pro forma financial statements is to look to the future or to analyze hypothetical scenarios.

These calculations project the income and outflow for the coming month quarter or year. Pro forma definition. According to Merriam-Webster pro forma means.

Proforma financial statements are the projected or forecasting financial statements prepared by the company using a certain driver conditions form or factors to projected the accounts balance or transactions of the proforma financial statements. A pro forma is a projected financial statement that helps a practice make important decisions such as bringing on a new provider a new service line expanding current services or opening a new location. Pro forma financials may not be GAAP.

Pro forma Latin for as a matter of form or for the sake of form is a method of calculating financial results using certain projections or presumptions. They can look forward or backward revealing financial information that standard financial statements simply cannot provide. Through this way a company can generate more profit or revenue by eliminating unproductive costs.

Typically a budget is developed each year and might be approved by a board of directors. The term pro forma Latin for as a matter of form or for the sake of form is most often used to describe a practice or document that is provided as a courtesy or satisfies minimum requirements conforms to a norm or doctrine tends to be performed perfunctorily or is considered a formality. Pro forma is actually a Latin term meaning for form or today we might say for the sake of form as a matter of form.