Pro forma statements for each plan provide important information about future expectations, including sales and earnings forecasts, cash flows, balance sheets, proposed capitalization, and income statements. Management also uses this procedure in choosing among budget alternatives.

How do you make a proforma balance sheet?

How to Create a Pro-Forma Balance Sheet

1. Step 1: Short Term Assets. The first two items on your pro-forma balance sheet will be your current cash assets and your accounts receivable.
2. Step 2: Long Term Assets.
3. Step 3: Total Assets.
4. Step 4: Liabilities.
5. Step 5: Final Tabulations.

How to make a pro forma financial statement?

The projections are achieved by using historical sales, accounting data and assumptions on future sales and costs. These financial statements projections are known financial modeling as Pro Forma financial statements. 1.2 Financial Statements Modeling This spreadsheet provides a template for financial statements forecasting.

What are the pro forma expenses for next year?

Your pro forma salaries for next year will be $210,000 and your pro forma expenses will be $105,000. You then figure your pro forma total expenses by adding pro forma salaries and pro forma other expenses together.

How to calculate your pro forma gross profit?

To figure your pro forma gross profit for next year, subtract the pro forma cost of goods sold from the pro forma sales. Thus, $1,100,000 minus $550,000 equals your gross profit, or $550,000. This is, of course, a very simple example. What you really want to do is take into consideration everything possible to project sales.

How is a pro forma income statement different from a historical income statement?

For my purposes here, a pro forma income statement is similar to a historical income statement, except it projects the future rather than tracks the past. If the projections predict a downturn in profitability, then you can make operational changes, such as increasing prices or decreasing costs, before these projections become reality.