A pro forma financial statement leverages hypothetical data or assumptions about future values to project performance over a period that hasn't yet occurred. In the online course Financial Accounting, pro forma financial statements are defined as “financial statements forecasted for future periods.
What is a proforma and why are they useful?
It is a useful tool that investors, business owners and creditors can use to examine financial assumptions about future events. Pro forma statements help a company to make future business plans, conduct comparisons and decide between potential strategies.
What does Performa mean?
1 : made or carried out in a perfunctory manner or as a formality. 2 : based on financial assumptions or projections: such as. a : reflecting a transaction (such as a merger) or other development as if it had been or will be in effect for a past or future period a pro forma balance sheet.
What does proforma mean in retail?
A pro forma income statement is a financial statement that uses both the actual and projected data (e.g. sales, margins, expenses) to estimate some future financial condition such as profits, cash flow or ending inventory levels for a defined period of time.
What is a proforma EBITDA?
What Does Pro Forma TTM EBITDA Mean? The pro forma TTM EBITDA is a projection of the trailing 12 months of EBITDA for a business that incorporates the impact of specific events or catalysts during the period. This is done to estimate what the recurring EBITDA or "run rate" will be going forward.
What is the purpose of a pro forma?
Pro forma, a Latin term meaning "as a matter of form," is applied to the process of presenting financial projections for a specific time period in a standardized format. Businesses use pro forma statements for decision-making in planning and control, and for external reporting to owners, investors, and creditors.Feb 6, 2020
What does pro forma income mean?
Pro-forma earnings most often refer to earnings that exclude certain costs that a company believes result in a distorted picture of its true profitability. The term may also refer to projected earnings included as part of an initial public offering or business plan (in Latin pro forma means "for the sake of form").
What is pro forma vs actual?
Pro forma describes how a property could, should, or would be performing based on certain assumptions or “what if” scenarios. On the other hand, “actual” reports the true financial performance of a rental property.
What is a pro forma example?
Think of it this way: A pro forma statement is a prediction, and a budget is a plan. Your budget may be based on the financial information of your pro forma statements—after all, it makes sense to make plans based on your predictions. For example: Your income this year is $37,000.
What is a pro forma Ebitda adjustment?
Pro Forma Adjusted EBITDA means the Adjusted EBITDA of the Company for the test period plus the Adjusted EBITDA of any Person that becomes a Restricted Subsidiary of the Company to the extent that the Company's Consolidated Net Income does not include the Net Income of such Person less the Adjusted EBITDA of any
What does pro forma profit and loss mean?
Pro Forma Income Statement (also known as pro forma profit and loss) means how the adjusted income statement will look like when certain assumptions like non-recurring items, restructuring costs etc were excluded or if a loss-making unit is discontinued.