business plan and proforma

Pro Forma Business Plan Template & Financial Statements

Written by Dave Lavinsky

What are Pro Forma Financial statements?

A pro forma business plan is simply another name for a business plan. The term “pro forma” specifically means “based on financial assumptions or projections” which all business plans are. That is, all business plans present a vision of the company’s future using assumptions and projections. “Pro forma” most specifically refers to the financial projections included in your plan, as these are entirely based on future assumptions.

Pro forma financial statements are a type of statement that provides estimates or financial projections for a company. They are often used by businesses to plan for upcoming periods or quarters, assess new opportunities, or track progress against goals.

Why include a Pro Forma Statement in your Business Plan

A pro forma statement is important for your business plan because it gives investors and lenders an idea of your company’s potential financial health. They use your pro forma statements in determining whether to invest in your company or not. Among other things, they consider the likelihood your company will achieve the financial results you forecast, and their expected return on investment (ROI). Your pro forma financial statements also help you to identify and track key financial indicators and metrics over time.

Writing a Pro Forma Business Plan

When writing a pro forma business plan, you will need to include information such as your company’s sales forecasts, expenses, capital expenditure plans, and funding requirements. You should also include a pro forma income statement, balance sheet, and cash flow statement.

Importance of a Pro Forma Income Statement in Business Plans

The pro forma income statement is a crucial financial tool that can be used to assess the viability of your business. It shows a company’s expected revenue and expenses over a period of time and can help you to identify potential problems early on.

    Finish Your Business Plan Today!

Types of pro forma statements in business plans.

There are several types of pro forma statements, including the income statement, balance sheet, and cash flow statement.

Pro Forma Income Statement

A pro forma income statement is an estimate of your company’s financial performance over a period of time. It shows your expected revenue and expenses and can be used to assess the viability of your business.

Example 5 Year Annual Income Statement

Pro Forma Balance Sheet

A pro forma balance sheet is an estimate of your company’s financial position at a specific point in time. It shows your assets, liabilities, and equity, and can be used to assess your company’s financial health.

Example 5 Year Annual Balance Sheet

Pro Forma Cash Flow Statement

A pro forma cash flow statement is an estimate of how your company’s cash flows over a period of time. It shows your expected cash inflows and outflows and can be used to assess your company’s financial health and ensure you never run out of money.

Example 5 Year Annual Cash Flow Statement

Pro Forma Income Statements for a Business Plan

Pro forma statements for a business plan can take many different forms, but they all typically include information on sales forecasts, expenses, capital expenditure plans, and funding requirements. A pro forma statement that is included in a business plan template should also include financial projections and break-even analysis. 

Cash Flow Statements and Pro Forma Income Statements

The main difference between a cash flow statement and a pro forma income statement is that a cash flow statement shows your actual cash inflows and outflows, while a pro forma income statement shows your estimated future financial performance. For example, if you make a sale today, it will be considered revenue in your income statement. But, if you don’t receive payment for that sale for 90 days, that would be reflected in your cash flow statement. A cash flow statement can help you to manage your finances effectively, while a pro forma income statement can help you to assess the viability of your business.

Pro Forma Statements and Budgets

Pro forma statements and budgets are both financial tools that can be used to track the progress of a business. However, there are key differences between them.

A budget is a plan for how you will use your resources to achieve specific goals. It shows your expected income and expenses and can help you to stay on track financially.

A pro forma statement estimates your company’s future financial performance. It shows your expected revenue and expenses and can be used to assess the viability of your business.

Both pro forma statements and budgets can be useful tools for businesses. However, budgets are more focused on short-term planning , while pro forma statements are more concerned with long-term financial planning.

Business Plan Pro Forma Template and Example

The following is an example of a pro forma business plan:

Executive Summary

In this pro forma business plan, we forecasted our company’s sales, expenses, and capital expenditures over the next three years. We also estimated our funding requirements and outlined our plans for growth. Our pro forma income statement shows that we are expected to have positive net income each year of the forecast period. Our pro forma balance sheet shows that we will have a strong financial position, with increasing equity and minimal debt. Lastly, our pro forma statement predicts healthy cash flow throughout the three-year period. We believe that these results demonstrate the viability of our business and its potential for long-term success.

Our company is XYZ, a leading provider of ABC products and services. We have been in business for 10 years, and our products are sold in over 10 countries. We have a strong track record of financial success, and we are now looking to expand our operations into new markets. In order to do this, we need to raise $5 million in funding.

Business Plan Pro Forma

In this section of the business plan, we will provide pro forma statements for our company’s sales, expenses, capital expenditures, funding requirements, and cash flow. These statements will demonstrate the viability of our business and its potential for long-term success.

Sales Forecast

We forecast that our sales will increase by 20% in each year of the forecast period. This growth will be driven by our expansion into new markets, as well as our continued focus on innovation and customer service.

Expense Forecast

We expect our expenses to increase at a slower rate than our sales, due to our economies of scale. We anticipate that our expenses will increase by 15% in Year 1, 10% in Year 2, and 5% in Year 3.

Capital Expenditure Forecast

We forecast that our capital expenditures will increase in line with our sales, at a rate of 20% per year. We plan to invest heavily in research and development, as well as new product launches.

Funding Requirements

We estimate that we will need to raise $5 million in funding in order to expand our operations into new markets. We plan to use this funding to invest in research and development, as well as to cover the costs of marketing and new product launches.

Cash Flow Forecast

Our pro forma cash flow statement predicts healthy cash flow throughout the three-year period. We expect to have positive cash flow in each year of the forecast period.

This pro forma business plan demonstrates the viability of our company and its potential for long-term success. We have a strong track record of financial success, and we are well-positioned to continue growing our business. Our pro forma statements show that we are expected to generate positive net income, and have a strong financial position and healthy cash flow. We believe that this business plan provides a clear roadmap for our company’s future growth.

A pro forma business plan is an important tool for any business owner. By outlining your sales, expenses, and profit, you can get a clear picture of your company’s financial health and make informed decisions about its future. If you’re not sure where to start, we can help. Our team of experts has created a comprehensive business plan template that will guide you through the process of creating your own pro forma business plan. So what are you waiting for? Get started today and ensure your company’s success tomorrow.

How to Finish Your Business Plan Template in 1 Day!

Don’t you wish there was a faster, easier way to finish your business plan template?

With Growthink’s Ultimate Business Plan Template you can finish your plan in just 8 hours or less!

Pro Forma Financial Statements (with Templates and Examples)

Bryce Warnes

Reviewed by

Janet Berry-Johnson, CPA

April 21, 2022

This article is Tax Professional approved

Pro forma definition

According to Merriam-Webster , “pro forma” means:

• Made or carried out in a perfunctory manner or as a formality
• Based on financial assumptions or projections

I am the text that will be copied.

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”).

When it comes to accounting, pro forma statements are financial reports for your business based on hypothetical scenarios. They’re a way for you to test out situations you think may happen in the future to help you make business decisions.

There are three major pro forma statements:

• Pro forma income statements
• Pro forma balance sheets
• Pro forma cash flow statements

Pro forma statements look like regular statements, except they’re based on what ifs, not real financial results. As in, “What if my business got a $50,000 loan next year?” Your pro forma statements for that scenario would show what your income, account balances, and cash flow would look like with a $50,000 loan.

Since pro forma statements deal with potential outcomes, they’re not considered GAAP compliant . This is because GAAP compliant reports must be based on historical information.

Pro forma statements don’t need to meet the strictest accounting standards , but must be clearly marked as “pro forma” and can’t be used for things like filing taxes. Using pro forma statements that aren’t marked as such to misrepresent your business to investors, the IRS, or financial institutions can be penalized by the Securities and Exchange Commission).

However, pro forma statements are still extremely useful. They can help you make a business plan, create a financial forecast, and even get funding from potential investors or lenders.

Different but related: you can send clients pro forma invoices to let them know how much their order would be if they placed it today.

Why create pro forma statements?

Creating pro forma statements for future scenarios can help you:

• Get financed, by showing lenders or investors how you would use their money to sustainably grow your business.
• Plan for the future, by considering best, worst, and most likely case scenarios in detail.
• Anticipate changes that may affect your business as it grows, such as entering a new tax bracket.

For these purposes, pro forma statements are typically created as a part of a financial forecast in financial accounting. Big corporations who have in-house accountants use pro forma statements for financial modeling and forecasting different scenarios.

Pro forma statements vs. budgets

It may be tempting to think of a pro forma statement as the same as a business budget . After all, you create both in anticipation of the future. And both help you plan how you’ll use your money. But budgets and pro forma statements are two distinct financial tools.

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. According to your pro forma annual income statement, your financial projections show it will be $44,000 next year. So, when you create next year’s budget, you can include that extra $7,000—maybe spending $4,000 over the course of the year to pay down the principal on a loan , while adding $3,000 to savings.

Types of pro forma statement

There are four main types of pro forma statements. While they all fall into the same categories—income statement, balance sheet, and cash flow statement—they differ based on the purpose of the financial forecast.

1. Full-year pro forma projection

This type of pro forma projection takes into account all of your financials for the fiscal year up until the present time, then adds projected outcomes for the remainder of the year. That can help you show investors or partners what business finances could look like by the end of the fiscal year.

2. Financing or investment pro forma projection

You may be courting investors or trying to convince your business partners of the value of a capital investment or additional financing. In that case, you can use a financing pro forma projection to make your case. It takes into account an injection of cash from an outside source—plus any interest payments you may need to make—and shows how it will affect your business’s financial position.

3. Historical with acquisition pro forma projection

This type of pro forma projection looks at the past financial statements of your business, plus the past financial statements of a business you want to buy . Then it merges them to show what your financials would have looked like if you made a business combination (or merger) earlier. You can use this scenario as a model of what may happen in the future if you buy the other business and restructure now.

4. Risk analysis pro forma projection

Looking at both best case and worst case scenarios helps you make financial decisions based on challenges you may face in the future. For instance, what happens if your main vendor raises their prices like they did last year? Or how will that proposed transaction of buying new equipment impact you long term? Risk analysis lets you take the future for a test ride, and try out different outcomes.

Pro forma templates

To create a pro forma statement, you can use the same template you’d use for a normal financial statement. You may want to use Bench’s free templates:

• Income statement
• Balance sheet
• Cash flow statement

How to create pro forma statements

The sample pro forma statements below may look different from the statements you create, depending on what your template looks like. But generally, these are the steps you need to take to create them—and the info your pro forma statements should include.

Creating a pro forma income statement

There are five steps to creating a pro forma income statement:

• Set a goal for sales in the period you’re looking at. Let’s say you want to increase your income by $18,000 over the course of one year.
• Set a production schedule that will let you reach your goal, and map it out over the time period you’re covering. In this case, you’ll want to earn an additional $1,500 income every month, for 12 months.
• Plan how you’ll match your production schedule. You could do this by growing your number of sales a fixed amount every month, or gradually increasing the amount of sales you make per month. It’s up to you—trust your experience as a business owner.
• It’s time for the “loss” part of “ Profit and Loss .” Calculate the cost of goods sold for each month in your projection. Then, deduct it from your sales. Deduct any other operating expenses you have, as well.
• Prepare your pro forma income statement using data you’ve compiled in the prior four steps.

One note: your pro forma statements will be much more accurate if your bookkeeping is up to date. That way, when you project future periods, you’re basing it off the reality of your business today.

How Bench can help

To predict the future, you first need to understand the past. With Bench, you get a crystal clear image of your financial history so you can focus on planning your future. We’re America’s largest bookkeeping service helping thousands of business owners better understand the financial health of their operations so they can keep focused on growth and planning. When it comes time to create a pro forma statement, you have reliable numbers and reports to get started. We may not be a crystal ball, but we’re the next best thing. Learn more .

Example pro forma income statement:

Rosalia’s Reliable Recordings

Creating a pro forma cash flow statement

You create a pro forma cash flow statement much the same way you’d create a normal cash flow statement. That means taking info from the income statement, then using the cash flow statement format to plot out where your money is going, and what you’ll have on hand at any one time. This pro forma statement can be part of a larger cash flow forecast used for decision making.

Your projected cash flow can give you a few different insights. If it’s negative, it means you won’t have enough cash on-hand to run your business, according to your current trajectory. You’ll have to make plans to borrow money and pay it off.

On the other hand, if net cash flow is positive, you can plan on having enough extra cash on hand to pay off loans, or save for a big investment.

Example pro forma cash flow statement

Mickie’s Murakami Museum

Creating a pro forma balance sheet

By drawing on info from the income statement and the cash flow statement, you can create pro forma balance sheets. However, you’ll also need previous balance sheets to make this useful—so you can see how your business got from “Balance A” to “Balance B.”

The balance sheet will project changes in your business accounts over time. So you can plan where to move money, when.

Example pro forma balance sheet

Daily Dumpling Deliveries

Once you’ve created your pro forma income statements, and cast your eyes forward to the future of your business, you can start planning how you’ll spend your money. It’s time to create a small business budget .

Related Posts

Eleven Alternatives to QuickBooks (For Small Business Owners)

QuickBooks isn't for everyone. Here are 11 alternatives to explore, each with a different emphasis.

Cash Flow Statement: Explanation and Example

Master cash flow statements, master your business’s cash flow.

Independent Contractor vs. Employee: What's the Difference?

You need to make an important distinction every time you hire paid help. Is the worker an employee or an independent contractor?

Join over 140,000 fellow entrepreneurs who receive expert advice for their small business finances

Get a regular dose of educational guides and resources curated from the experts at Bench to help you confidently make the right decisions to grow your business. No spam. Unsubscribe at any time.

• Business Essentials
• Leadership & Management
• Credential of Leadership, Impact, and Management in Business (CLIMB)
• Entrepreneurship & Innovation
• Digital Transformation
• Finance & Accounting
• Business in Society
• For Organizations
• Support Portal
• Media Coverage
• Founding Donors
• Leadership Team

• Harvard Business School →
• HBS Online →
• Business Insights →

Business Insights

Harvard Business School Online's Business Insights Blog provides the career insights you need to achieve your goals and gain confidence in your business skills.

• Career Development
• Communication
• Decision-Making
• Earning Your MBA
• Negotiation
• News & Events
• Productivity
• Staff Spotlight
• Student Profiles
• Work-Life Balance
• AI Essentials for Business
• Alternative Investments
• Business Analytics
• Business Strategy
• Business and Climate Change
• Design Thinking and Innovation
• Digital Marketing Strategy
• Disruptive Strategy
• Economics for Managers
• Entrepreneurship Essentials
• Financial Accounting
• Global Business
• Launching Tech Ventures
• Leadership Principles
• Leadership, Ethics, and Corporate Accountability
• Leading with Finance
• Management Essentials
• Negotiation Mastery
• Organizational Leadership
• Power and Influence for Positive Impact
• Strategy Execution
• Sustainable Business Strategy
• Sustainable Investing
• Winning with Digital Platforms

What Are Pro Forma Financial Statements?

• 28 Oct 2021

When it comes to making business decisions, so much relies on numbers. To get sign-off from key stakeholders, win investors, and strategically plan, you need to demonstrate that your ideas make financial sense.

While certain financial statements —such as balance sheets, income statements, cash flow statements, and annual reports—help provide a historical snapshot of a business’s performance, they often lack the ability to provide foresight when planning for the future. For this reason, professionals typically turn to forecasts and financial projections to guide their plans and answer critical “what if” questions. Pro forma financial statements are a common type of forecast that can be useful in these situations.

Here’s a closer look at what pro forma financial statements are, how they’re created, and why they’re a key aspect of financial decision-making.

Access your free e-book today.

What Is a Pro Forma Financial Statement?

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. They may also be referred to as a financial forecast or financial projection.”

The course notes that these projections can be used “as a depiction of what the financial statements for the business will look like over a certain period of time, if the assumptions made when preparing them hold true.”

Since the term “pro forma” refers to projections or forecasts, it can apply to a variety of financial statements, including:

• Income statements
• Balance sheets
• Cash flow statements

Whether you’re trying to interpret pro forma financial statements or prepare them, these projections can be useful in guiding important business decisions. In fact, business owners, investors, creditors, and other key decision-makers all use pro forma financial statements to measure the potential impact of business decisions.

How Are Pro Forma Financial Statements Used?

Traditionally, financial statement analysis is used to better understand a company’s performance over a specified period. While this provides insight into a company’s historical health, creating pro forma financial statements focuses on its future. For this reason, these reports can be leveraged in several ways, including analyzing risk, projecting investments, and showing expected results before the end of a reporting period.

One of the most important uses of pro forma reports is related to decision-making and strategic planning efforts. For example, you might create pro forma financial statements to reflect the outcomes of three investment scenarios for your business. Doing so can allow you to conduct a side-by-side comparison of possible outcomes to determine which is favorable and guide your planning process.

Creating Pro Forma Financial Statements

Keep in mind that the general process of creating pro forma financial statements isn’t significantly different from that of creating traditional statements. The difference lies in the assumptions and adjustments made about various inputs, while the format and calculations remain the same.

There are, however, specific methods used for these forecasts. The percent of a sales forecasting method, for example, involves determining future expected sales and finding trends across accounts in statements. This is typically used when creating pro formas internally.

Other individual line items can also be easily forecasted, such as the cost of goods sold, since it can be assumed it will proportionally grow with sales. Line items like income tax expense, on the other hand, typically don’t change directly with sales. Stable businesses can generally estimate income tax expense as a percentage of income before taxes.

All in all, the process of preparing a pro forma balance sheet is much the same as preparing a normal balance sheet . The same holds true for the process of preparing income statements and cash flow statements. It differs when you begin forecasting various line items and calculating how those projections impact your bottom line.

Beyond the Numbers

The true value of pro forma statements goes beyond the numbers they show. These reports provide key stakeholders, investors, and creditors the foresight needed to make decisions and strategically plan. Managers and individual contributors can also benefit from creating pro forma statements, enabling them to understand different factors impacting business units.

Remember: There are limitations to pro forma financial statements. Since these documents are based on assumptions, they shouldn’t be taken as fact. Rather, they can inform decisions using hypothetical data based on historical trends.

Taking an online course like Financial Accounting can help you understand how to create and interpret different kinds of financial statements so you can find meaning in them. Learners enrolled in the course learn the language of accounting and how to create financial statements and forecasts to make strategic decisions.

Do you want to learn more about what's behind the numbers on financial statements? Explore Financial Accounting , one of three courses comprising our Credential of Readiness (CORe) program , to discover how you can develop an intuitive knowledge of financial principles and statements to unlock critical insights into performance and potential.

About the Author

How To Write A Business Plan (2024 Guide)

Updated: Apr 17, 2024, 11:59am

Table of Contents

Brainstorm an executive summary, create a company description, brainstorm your business goals, describe your services or products, conduct market research, create financial plans, bottom line, frequently asked questions.

Every business starts with a vision, which is distilled and communicated through a business plan. In addition to your high-level hopes and dreams, a strong business plan outlines short-term and long-term goals, budget and whatever else you might need to get started. In this guide, we’ll walk you through how to write a business plan that you can stick to and help guide your operations as you get started.

Featured Partners

ZenBusiness

$0 + State Fees

Varies By State & Package

On ZenBusiness' Website

On LegalZoom's Website

Northwest Registered Agent

$39 + State Fees

On Northwest Registered Agent's Website

Drafting the Summary

An executive summary is an extremely important first step in your business. You have to be able to put the basic facts of your business in an elevator pitch-style sentence to grab investors’ attention and keep their interest. This should communicate your business’s name, what the products or services you’re selling are and what marketplace you’re entering.

Ask for Help

When drafting the executive summary, you should have a few different options. Enlist a few thought partners to review your executive summary possibilities to determine which one is best.

After you have the executive summary in place, you can work on the company description, which contains more specific information. In the description, you’ll need to include your business’s registered name , your business address and any key employees involved in the business. 

The business description should also include the structure of your business, such as sole proprietorship , limited liability company (LLC) , partnership or corporation. This is the time to specify how much of an ownership stake everyone has in the company. Finally, include a section that outlines the history of the company and how it has evolved over time.

Wherever you are on the business journey, you return to your goals and assess where you are in meeting your in-progress targets and setting new goals to work toward.

Numbers-based Goals

Goals can cover a variety of sections of your business. Financial and profit goals are a given for when you’re establishing your business, but there are other goals to take into account as well with regard to brand awareness and growth. For example, you might want to hit a certain number of followers across social channels or raise your engagement rates.

Another goal could be to attract new investors or find grants if you’re a nonprofit business. If you’re looking to grow, you’ll want to set revenue targets to make that happen as well.

Intangible Goals

Goals unrelated to traceable numbers are important as well. These can include seeing your business’s advertisement reach the general public or receiving a terrific client review. These goals are important for the direction you take your business and the direction you want it to go in the future.

The business plan should have a section that explains the services or products that you’re offering. This is the part where you can also describe how they fit in the current market or are providing something necessary or entirely new. If you have any patents or trademarks, this is where you can include those too.

If you have any visual aids, they should be included here as well. This would also be a good place to include pricing strategy and explain your materials.

This is the part of the business plan where you can explain your expertise and different approach in greater depth. Show how what you’re offering is vital to the market and fills an important gap.

You can also situate your business in your industry and compare it to other ones and how you have a competitive advantage in the marketplace.

Other than financial goals, you want to have a budget and set your planned weekly, monthly and annual spending. There are several different costs to consider, such as operational costs.

Business Operations Costs

Rent for your business is the first big cost to factor into your budget. If your business is remote, the cost that replaces rent will be the software that maintains your virtual operations.

Marketing and sales costs should be next on your list. Devoting money to making sure people know about your business is as important as making sure it functions.

Other Costs

Although you can’t anticipate disasters, there are likely to be unanticipated costs that come up at some point in your business’s existence. It’s important to factor these possible costs into your financial plans so you’re not caught totally unaware.

Business plans are important for businesses of all sizes so that you can define where your business is and where you want it to go. Growing your business requires a vision, and giving yourself a roadmap in the form of a business plan will set you up for success.

How do I write a simple business plan?

When you’re working on a business plan, make sure you have as much information as possible so that you can simplify it to the most relevant information. A simple business plan still needs all of the parts included in this article, but you can be very clear and direct.

What are some common mistakes in a business plan?

The most common mistakes in a business plan are common writing issues like grammar errors or misspellings. It’s important to be clear in your sentence structure and proofread your business plan before sending it to any investors or partners.

What basic items should be included in a business plan?

When writing out a business plan, you want to make sure that you cover everything related to your concept for the business,  an analysis of the industry―including potential customers and an overview of the market for your goods or services―how you plan to execute your vision for the business, how you plan to grow the business if it becomes successful and all financial data around the business, including current cash on hand, potential investors and budget plans for the next few years.

• Best VPN Services
• Best Project Management Software
• Best Web Hosting Services
• Best Antivirus Software
• Best LLC Services
• Best POS Systems
• Best Business VOIP Services
• Best Credit Card Processing Companies
• Best CRM Software for Small Business
• Best Fleet Management Software
• Best Business Credit Cards
• Best Business Loans
• Best Business Software
• Best Business Apps
• Best Free Software For Business
• How to Start a Business
• How To Make A Small Business Website
• How To Trademark A Name
• What Is An LLC?
• How To Set Up An LLC In 7 Steps
• What is Project Management?

How To Get A Business License In North Dakota (2024)

How To Write An Effective Business Proposal

Best New Hampshire Registered Agent Services Of 2024

Employer Staffing Solutions Group Review 2024: Features, Pricing & More

How To Sell Clothes Online In 2024

2024 SEO Checklist

Julia is a writer in New York and started covering tech and business during the pandemic. She also covers books and the publishing industry.

Kelly Main is a Marketing Editor and Writer specializing in digital marketing, online advertising and web design and development. Before joining the team, she was a Content Producer at Fit Small Business where she served as an editor and strategist covering small business marketing content. She is a former Google Tech Entrepreneur and she holds an MSc in International Marketing from Edinburgh Napier University. Additionally, she is a Columnist at Inc. Magazine.

Pro Forma Financial Statements: A Comprehensive Guide for Businesses

• Banking & Finance
• Bookkeeping
• Business Operations
• Starting a Business

Pro forma financial statements play a crucial role in business planning and decision-making processes. These financial reports are based on hypothetical scenarios, enabling business owners and managers to evaluate potential situations that could occur in the future. By utilizing pro forma statements, companies can project the financial impact of various business decisions, such as launching new product lines, expanding to new locations, or restructuring a department.

Understanding pro forma financial statements involves various components, such as income statements, balance sheets, and statements of cash flow. Each of these elements provides a financial snapshot of a company’s hypothetical future performance. By combining these components, it is possible to create a comprehensive financial projection that can help inform strategic decisions and evaluate the potential return on investment.

Key Takeaways

• Pro forma financial statements help businesses make informed decisions by evaluating hypothetical scenarios
• Components of pro forma statements include income statements, balance sheets, and statements of cash flow
• These statements are essential tools for strategic planning and assessing the impact of various business decisions

Understanding Pro Forma Statements

Definition and purpose.

Pro forma financial statements are hypothetical financial reports that project the future financial performance of an entity, based on expected income, expenses, assets, and liabilities. They are created using assumptions about future values and conditions, which serve to forecast financial performance over a period that has not yet occurred. Their primary purpose is to aid in business planning, investment decision making, and to show the potential impact of a proposed transaction on a company’s financial health.

Significance to Investors

Investors find pro forma financial statements valuable in evaluating a business’s potential for growth and profitability. These statements help investors to:

• Identify trends: Comparing the projected numbers with historical trends can reveal areas of opportunity or concern.
• Assess risk: By reviewing pro forma statements, investors can see how the business may be affected under various hypothetical scenarios, such as changes in the economy, market, or industry.
• Make informed decisions: Investors can use pro forma statements to estimate returns on investment or potential value of a company, and to decide whether to buy or sell securities.

Differences Between GAAP and Pro Forma

Financial statements prepared using Generally Accepted Accounting Principles (GAAP) are based on a company’s historical financial performance, whereas pro forma financial statements focus on future projections. The main differences include:

• Basis of calculations : GAAP financials use historical data, while pro forma financials use forward-looking data.
• Accounting standards : GAAP financial statements follow strict accounting standards, whereas pro forma financial statements may deviate from these standards, relying on a company’s assumptions.
• Usage : GAAP statements are used to assess past performance, make comparisons across different periods, and analyze trends; pro forma statements are used for planning, forecasting, and scenario analysis.

It is crucial to note that pro forma financial statements should be used in conjunction with GAAP-compliant financials to gain a comprehensive view of a company’s health and potential growth.

Components of Pro Forma Financial Statements

Pro forma financial statements are essential tools for businesses to plan and project their future financial performance. These statements are based on assumptions and estimates, helping companies understand the impact of various scenarios on their financial position. The three primary components of pro forma financial statements are the Pro Forma Income Statement, Pro Forma Balance Sheet, and Pro Forma Cash Flow Statement.

Pro Forma Income Statement

The Pro Forma Income Statement, also known as the projected income statement, provides an estimate of the company’s future revenues and expenses. This statement helps businesses plan for growth, identify potential risks, and make informed decisions based on expected profitability. The main components of a pro forma income statement include:

• Revenue : The projected sales generated by the company during a specific period.
• Cost of Goods Sold : The estimated cost of producing or purchasing the products sold.
• Gross Profit : The difference between revenue and cost of goods sold.
• Operating Expenses : The anticipated expenses associated with running the business, including salaries, rent, and marketing.
• Net Income : The estimated profit or loss, calculated by subtracting operating expenses from gross profit.

Pro Forma Balance Sheet

The Pro Forma Balance Sheet provides an overview of the company’s projected assets, liabilities, and equity. This statement helps businesses understand their anticipated financial position and evaluate their solvency and liquidity. The main components of a pro forma balance sheet include:

• Assets : The resources a company expects to own or control, such as cash, accounts receivable, inventory, and fixed assets.
• Liabilities : The obligations a company anticipates incurring, such as accounts payable, loans, and taxes payable.
• Equity : The residual interest in the company’s assets, representing the difference between assets and liabilities. This includes retained earnings and contributed capital.

Pro Forma Cash Flow Statement

The Pro Forma Cash Flow Statement offers insight into the company’s anticipated cash inflows and outflows, enabling businesses to plan and manage their liquidity. This statement presents an estimation of cash flows from operating, investing, and financing activities. The main components of a pro forma cash flow statement include:

• Operating Activities : The cash flows generated from a company’s core business operations, such as sales and expenses.
• Investing Activities : The cash flows associated with purchases and sales of assets, such as property, equipment, or investments.
• Financing Activities : The cash flows related to borrowing, repaying loans, issuing stock, or paying dividends.

By understanding and utilizing pro forma financial statements, companies can make more informed decisions, develop strategies, and improve their overall financial planning and management.

Creating Pro Forma Statements

Forecasting and assumptions.

When creating pro forma financial statements, the first step is to forecast future revenues, expenses, and other financial data based on a company’s past performance and experience. It is important to make reasonable and educated assumptions to provide an accurate projection of the company’s future financial performance. Some common assumptions used when creating pro forma statements include:

• Expected growth rates
• Changes in market conditions
• Alterations in the company’s strategy or operations
• Expected changes in costs or pricing

Preparing Hypothetical Scenarios

In addition to using historical data and assumptions, pro forma financial statements can incorporate hypothetical scenarios. These scenarios provide a range of possible financial outcomes based on various “what-if” situations. For example, consider a software company that plans to launch a new product in six months. The company can create multiple pro forma statements based on different launch scenarios:

• Scenario 1 : The software product has a successful launch, generating significant sales and revenue.
• Scenario 2 : The software product has a moderate launch, with sales and revenue matching current market conditions.
• Scenario 3 : The software product experiences a weak launch, with sales and revenue falling below market expectations.

Creating a variety of hypothetical scenarios can help gain insight into the potential financial impacts of different decisions, risks, and opportunities.

Projecting Future Performance

Once you have established a solid foundation of assumptions and hypothetical scenarios, you can begin projecting future performance using the pro forma financial statements. This process involves utilizing the following statements:

• Pro Forma Income Statement : Estimates future revenues, expenses, and net income.
• Pro Forma Balance Sheet : Reflects the company’s projected financial position, including assets, liabilities, and equity.
• Pro Forma Cash Flow Statement : Showcases expected cash inflows and outflows, helping a company plan for liquidity needs.

The information gathered from each of these statements can help a company make business decisions, secure funding, and drive strategic planning. In summary, pro forma financial statements serve as a valuable tool for forecasting, preparing hypothetical scenarios, and projecting future performance to ensure a company’s long-term financial success.

Analyzing Pro Forma Statements

Financial ratios and metrics.

When analyzing pro forma financial statements , it is essential to use various financial ratios and metrics to evaluate a company’s performance adequately. These ratios can provide valuable insights into the company’s financial health. Key ratios include:

• Liquidity ratios , such as the current ratio and quick ratio, help assess the company’s ability to meet short-term obligations.
• Solvency ratios , such as the debt-to-equity ratio, evaluate the company’s long-term financial stability and its ability to meet long-term debts.
• Profitability ratios , including the gross margin and return on equity (ROE), gauge the company’s earnings relative to its investments and equity.
• Efficiency ratios , like inventory turnover and the accounts receivable turnover, reveal the effectiveness of the company’s assets management.

These ratios, derived from balance sheets and income statements, can be compared to industry benchmarks to understand how the business is performing against competitors.

Evaluating Business Potential

To gain a clear understanding of a company’s potential for future growth, pro forma earnings must be examined in conjunction with the anticipated financial impact of various business decisions. This analysis enables investors and management to:

• Assess the potential profitability of new projects or investment opportunities.
• Estimate the effect of price changes for products or services.
• Evaluate the implications of business expansions—that may involve mergers, acquisitions, or entry into new markets.
• Gauge the potential impact of changes in cost structures, such as modifications in labor costs.

Using tools like forecasting and scenario planning, decision-makers can estimate the organization’s future financial position and determine actionable strategies to optimize performance.

Risk Analysis

An important aspect of analyzing pro forma statements is identifying potential risks that might affect the company’s financial performance. Risk analysis involves evaluating factors that could negatively impact revenue, increase costs, or alter the overall business dynamics. These factors include:

• Market risks: Changes in consumer preferences, increased competition, or market saturation.
• Operational risks: Disruptions in the supply chain, inefficient production processes, or employee turnover.
• Financial risks: Interest rate fluctuations, exchange rate volatility, or changes in credit terms.

A comprehensive risk analysis enables management to make well-informed business decisions and devise contingency plans to minimize the company’s exposure. This, in turn, helps safeguard the organization’s bottom line and ensure a robust financial standing in the long run.

Strategic Use of Pro Forma Projections

Pro forma financial statements are used by business owners and companies for various strategic purposes. These include business planning and budgeting, funding and investment attraction, and mergers and acquisitions.

Business Planning and Budgeting

Companies use pro forma projections to create a detailed budget, forecasting revenues, expenses, and cash flow, which usually span over three to five years. This provides insights into the financial health and growth potential of the business. It helps companies to:

• Make data-driven decisions
• Identify areas for cost savings
• Determine feasible growth strategies
• Allocate resources efficiently

By leveraging pro forma projections, businesses can test hypothetical scenarios and make informed decisions, effectively planning and structuring their financial activities.

Funding and Investment Attraction

Pro forma financial statements are critical in attracting funding and investments for businesses. These projections provide potential investors with a clear understanding of the business’s:

• Future growth potential
• Risk management strategies
• Financial stability

Investment pro forma projections showcase the company’s ability to generate returns on investments, giving investors the confidence to commit their capital. Business owners can tailor these projections to highlight their business’s unique strengths, ultimately appealing to a broad range of potential investors.

Mergers and Acquisitions

In mergers and acquisitions, pro forma financial statements play an important role in revealing the financial impact of a potential transaction. Companies create historical with acquisition pro forma projections that showcase combined financial position of both organizations. This helps in assessing:

• Expected synergies
• Post-acquisition financial performance
• Integration costs

By identifying these financial outcomes, companies can better evaluate the potential benefits and risks associated with mergers and acquisitions, ensuring that the decision to pursue the transaction is well-informed and in line with their strategic goals.

Real-World Application of Pro Forma

Public reporting and the sec.

Pro forma financial statements often play a significant role in public reporting, especially when dealing with the Securities and Exchange Commission (SEC). Companies may use pro forma statements to present their financial results, adjusted for specific events such as acquisitions or divestitures. This provides stakeholders with a clearer understanding of the company’s financial position and helps them make informed decisions.

Key aspects of pro forma financial statements in public reporting:

• Financial forecast based on hypothetical scenarios
• Used for decision-making by investors, creditors, and other stakeholders
• Adjustments for specified events, such as acquisitions

Case Studies of Successful Use Cases

1. Business Expansion:

A company plans to expand its operations by opening a new manufacturing facility. They prepare pro forma financial statements to estimate the impact on future revenue, expenses, and profitability, considering various factors such as initial investment, operating costs, and expected sales. This helps them align their growth strategy and make informed decisions on whether or not to proceed with the expansion.

2. Mergers and Acquisitions:

A company is considering acquiring a smaller competitor. They create pro forma statements combining their own historical financial information with that of the acquisition target. This enables them to better understand the combined entity’s future financial performance and potential synergetic effects.

3. Restructuring:

A company facing financial challenges decides to restructure its operations to improve efficiency. They use pro forma financial statements to analyze different restructuring scenarios, such as cost reduction initiatives, refinancing options, or divestitures. This assists them in evaluating the long-term viability and profitability of their restructuring plan.

Learning from Pro Forma Mistakes

While pro forma statements can provide valuable insights, they can also be subject to misuse or misinterpretation. Fraudulent activities may involve manipulating pro forma results to present a rosier financial picture than reality, potentially misleading investors and other stakeholders.

To avoid such pitfalls and maintain a neutral and clear stance, companies should:

• Clearly disclose the basis of any adjustments or assumptions made
• Ensure the use of consistent methodologies across multiple scenarios
• Conduct thorough sensitivity analyses, incorporating a range of possible outcomes
• Seek guidance from accounting or financial experts, when necessary

By understanding the real-world application of pro forma financial statements and learning from past mistakes, businesses can use these tools effectively to drive informed decision-making and achieve better outcomes.

Limitations and Criticisms of Pro Forma

Potential for misrepresentation.

Pro forma financial statements may present an optimistic picture of a company’s financial health, intentionally or unintentionally, that differs from the reality per Generally Accepted Accounting Principles (GAAP). The adjusted nature of pro forma statements allows management to exclude certain items that they consider non-recurring or extraordinary. This level of discretion opens the door for worst-case scenarios , where pro forma statements might be utilized to paint an overly favorable picture of the company’s performance, potentially veiling fraudulent activities or significant financial issues.

A relevant example of this issue can be observed in cases when companies release pro forma earnings and provide little or no reconciling information, making comparisons with audited GAAP financial statements difficult. Thus, it is essential for decision-makers, such as investors and analysts, to be aware of the potential for misrepresentation in pro forma disclosures and to remain vigilant in their research and due diligence.

Understanding Limitations in Decision Making

While pro forma statements provide valuable insights for companies’ internal management, their usefulness is limited for external decision-making by investors or other stakeholders. These statements often focus on estimates and projections, rather than actual financial data, which can result in an unclear picture of a company’s performance. Furthermore, pro forma statements might not take into account the full range of worst-case scenarios , increasing the risk inherent in making decisions based on these projections.

In order to navigate the limitations of pro forma statements, it is crucial for decision-makers to:

• Understand the basis : Scrutinize the methods used to create pro forma statements, such as non-recurring items excluded or other adjustments made by management.
• Compare with GAAP : Cross-check the pro forma disclosures with audited financial statements, ensuring a more comprehensive and accurate understanding of the company’s financial health.
• Evaluate risks : Assess the likelihood and potential impact of worst-case scenarios not captured by the pro forma statements, incorporating this knowledge into the decision-making process.

Despite their limitations, pro forma financial statements have a place in financial planning and forecasting. However, recognizing their limitations and staying cautious in the decision-making process is key to fully leverage their value while avoiding potential pitfalls.

Legal and Ethical Considerations

Gaap compliance.

Pro forma financial statements should adhere to Generally Accepted Accounting Principles (GAAP) in order to provide accurate and reliable information to investors and other stakeholders. While pro forma statements are used to illustrate the potential impact of a significant transaction on historical financial data, they must still adhere to GAAP requirements, which are designed to ensure consistency and comparability across different financial reports.

For example, when preparing pro forma financial statements, the following GAAP principles should be considered:

• Revenue Recognition : Ensure that revenue is recognized in accordance with GAAP standards, which typically means recognizing revenue when it is earned and realizable.
• Consistency : Apply accounting policies and methods consistently across all financial reports, including pro forma statements, to ensure comparability between different periods and scenarios.
• Conservatism : Exercise caution in making assumptions and estimates when preparing pro forma statements, to avoid overstating potential revenues or understating potential costs.

It is also important to keep in mind that the SEC (Securities and Exchange Commission) requires companies to provide a thorough and compliant pro forma financial information when significant business combinations or real estate transactions occur.

Addressing Fraudulent Pro Forma Practices

As with all financial reports, there is a risk that pro forma financial information could be used for fraudulent purposes. To mitigate this risk, companies should implement certain policies and procedures to ensure the accuracy and integrity of their pro forma statements:

• Internal Controls : Implement robust internal controls over the financial reporting process, including controls related to the preparation of pro forma statements. This may involve segregating duties between those who generate the data for the pro forma statements and those responsible for reviewing them.
• Documentation : Maintain detailed records supporting the assumptions and estimates used in the preparation of pro forma statements. This documentation should be readily available for review by auditors or regulatory authorities when necessary.
• Transparency : Clearly disclose the basis for any adjustments made in pro forma statements, such as one-time charges or non-recurring items. This includes providing a detailed reconciliation between historical financial statements and the pro forma information.
• Oversight : Establish a process for independent review and approval of pro forma financial information by individuals with appropriate expertise, such as an audit committee or external auditor.

In summary, ensuring legal and ethical compliance in pro forma financial statements is crucial to maintain investor confidence and uphold the integrity of financial reports. By adhering to GAAP requirements and implementing safeguards against potential fraudulent practices, companies can produce accurate and reliable pro forma information that effectively illustrates the potential impact of significant transactions on their financial position and results of operations.

Frequently Asked Questions

What is the purpose of pro forma financial statements in assessing a company’s financial health.

Pro forma financial statements provide a hypothetical look at how a company would perform based on a set of credible assumptions about one or more transactions it is contemplating. This enables businesses to evaluate the potential impact of new product launches, expansions, or other strategic decisions, making them essential tools for planning and decision-making.

How do pro forma and traditional profit and loss statements differ?

Traditional profit and loss statements are based on actual financial results, providing an accurate representation of a company’s past performance. Pro forma statements, on the other hand, are based on hypothetical scenarios, such as the impact of a specific business decision or a future event. In essence, pro forma statements are projections, while traditional statements are historical records.

What distinguishes pro forma financial statements from prospective financial statements?

Pro forma financial statements are projections that consider hypothetical situations, such as a proposed transaction or a new product launch. Prospective financial statements, on the other hand, provide a forecast of a company’s future financial position based on current business conditions and expected trends. While both types of statements involve predictions, pro forma statements focus on specific scenarios, whereas prospective statements provide a broader outlook on the company’s potential performance.

Are there specific instances where pro forma financial statements should not be utilized?

Pro forma financial statements are most useful when analyzing potential business decisions or anticipating the impact of future events. However, they should not be used as a substitute for traditional financial statements when assessing a company’s overall financial health or stability. Additionally, pro forma statements can be misleading if based on unrealistic or overly optimistic assumptions, and users need to scrutinize their underlying premises carefully.

Is adherence to GAAP required for pro forma financial statements?

While pro forma financial statements are not subject to the same strict adherence to Generally Accepted Accounting Principles (GAAP) as traditional financial statements, it is essential to maintain transparency and consistency in the presentation and preparation of these projections. Misleading or inaccurate pro forma statements can result in a loss of credibility and trust with stakeholders, making it crucial to approach them with integrity and objectivity.

How do pro forma financials assist in cash flow forecasting and management?

Pro forma financial statements, including cash flow statements, provide insights into a company’s anticipated cash inflows and outflows based on specific business scenarios. This allows management to anticipate potential liquidity issues, evaluate financing options, and make informed decisions regarding cash flow management. In essence, pro forma cash flow statements contribute to strategic planning and help minimize financial risks.

• 1-800-711-3307
• Expense management
• Corporate card
• Tax returns & preparation
• Payment processing
• Tax compliance
• Vision & clarity
• Accounting mobile app
• Reduce your accounting expenses
• What does a bookkeeper do
• Why outsource
• Cash vs. Accrual Accounting
• Guides & ebooks
• How Finally works
• Privacy policy
• Terms of service

*Finally is not a CPA firm © 2024 Finally, Backoffice.co , Inc. All rights reserved.

How Cube works

Sync data, gain insights, and analyze business performance right in Excel, Google Sheets, or the Cube platform.

Built with world-class security and controls from day one.

Integrations

Connect and map data from your tech stack, including your ERP, CRM, HRIS, business intelligence, and more.

Developer Center

Cube's API empowers teams to connect and transform their data seamlessly.

Break free from clunky financial analysis tools. Say hello to a flexible, scalable FP&A solution.

See Cube in action

Centralized Data Management

Automatically structure your data so it aligns with how you do business and ensure it fits with your existing models.

Reporting & Analytics

Easily collaborate with stakeholders, build reports and dashboards with greater flexibility, and keep everyone on the same page.

Planning & Modeling

Accelerate your planning cycle time and budgeting process to be prepared for what's next.

Use Cases by Industry

Business Services

Financial Services

Manufacturing

Real Estate

Creating a high-impact finance function

Secrets from 7 leading finance experts.

Download the ebook

Customer Stories

Discover how finance teams across all industries streamline their FP&A with Cube.

Featured Customers

BlueWind Medical reduced company spend by over $100k with Cube

Edge Fitness Clubs cuts reporting time by 50% & saves $300,000 annually

Join our exclusive, free Slack community for strategic finance professionals like you.

Join the community

Content Library

Discover books, articles, webinars, and more to grow your finance career and skills.

Find the Excel, Google Sheets, and Google Slide templates you need here.

Discover expert tips and best practices to up-level your FP&A and finance function.

Need your finance and FP&A fix? Sign up for our bi-weekly newsletter from former serial CFO turned CEO of Cube, Christina Ross.

Help Center

Make the most of Cube or dig into the weeds on platform best practices.

Get the guide

We're on a mission to help every company hit their numbers. Learn more about our values, culture, and the Cube team.

Got questions or feedback for Cube? Reach out and let's chat.

Grow your career at Cube. Check out open roles and be part of the team driving the future of FP&A.

In the news

Curious what we're up to? Check out the latest announcements, news, and stories here.

A newsletter for finance—by finance

Sign up for our bi-weekly newsletter from 3x serial CFO turned CEO of Cube, Christina Ross.

Subscribe now

Updated: October 24, 2023 |

What's a pro forma template? [Free pro forma templates for Excel]

Jake Ballinger is an experienced SEO and content manager with deep expertise in FP&A and finance topics. He speaks 9 languages and lives in NYC.

Financial statements provide a snapshot of a company's financial health at any given time.

While financial statements offer a clear view of a business's past or current performance, pro forma statements may give a more informed picture of future performance.

Pro forma financial statements show what a company's financials would look like after a significant event, such as an acquisition or merger. They help businesses budget, forecast, and plan for their financial future. 

Pro forma statements can be complex to understand and calculate, so we’ve provided free templates to simplify the process. 

Download the pro forma templates below or keep reading for a full breakdown of pro forma statements. 

Jake Ballinger

FP&A Writer, Cube Software

Get out of the data entry weeds and into the strategy.

Sign up for The Finance Fix

Sign up for our bi-weekly newsletter from serial CFO and CEO of Cube, Christina Ross.

Key takeaways

• A pro forma statement is a forward-looking statement that projects a company's future financial performance sans non-recurring costs (like the cost of acquiring some other business). 
• They include pro forma income statements, pro forma balance sheets, and pro forma cash flow statements.
• Pro forma financial statements help businesses plan for the future by providing a snapshot of their financials under different scenarios.

What are pro forma financial statements?

A pro forma financial statement is a forward-looking statement that projects a company's future financial performance. “Pro forma” is Latin for “as a matter of form” or “as a formality.” 

Pro forma statements help businesses make decisions and plan for the future by providing a snapshot of their financials in different scenarios. Companies often use them to assess their growth potential or obtain financing from investors. 

Pro forma statements can be applied to various financial statements, including income, balance, and cash flow statements.

When do we use pro forma statements?

Pro forma statements are helpful during periods of rapid growth or change. Companies can use them to assess the impact of a proposed merger or acquisition, a new product launch, expansion into new markets, or other future changes. 

Businesses also use them to make significant decisions such as large purchases, real estate transactions, leases, budget or cash flow projections, financial ratio analysis, and profit/loss projections. It can also be an excellent tool for motivating staff by showing them the company's potential future earnings. 

Financial statements vs. pro forma statements 

The SEC defines a financial statement as a formal, written record of the financial activities of a person, business, or other entity. From assets and liabilities to income and cash flow, financial statements allow for a complete picture of the current financial standing of a business. 

Pro forma statements are a specific type of financial statement that focuses on the impact of hypothetical situations on a company’s future revenue, expenses, and profitability. 

Pro forma statements can be misleading since they do not necessarily follow GAAP accounting principles. In other words, they can be made to look rosier than reality. 

Pro forma statement formats

Pro forma statements come in a couple of forms. The most common are the pro forma income statement, balance sheet, and cash flow statement.

Pro forma income statement

The pro forma income statement shows a company’s expected revenue and expenses. It illustrates what a business's income would look like if they exclude certain costs. 

For example, if a business is considering a new marketing campaign, it’ll want to know how it'll affect its bottom line. They could create a pro forma income statement that excludes the costs of the campaign. 

By using pro forma income statements, an organization can get an idea of how profitable the business would be without the campaign expenses.

Pro forma balance sheet

A pro forma balance sheet is a financial statement showing a company’s expected assets, liabilities, and equity after a significant event, such as an acquisition or a new financing round.

An excellent example of using a pro forma balance sheet is if your company considers taking on new debt. You can see how the new debt will impact your company's financial position and make an informed decision about whether to proceed with the loan. After all, interest payments on debt can significantly impact a company’s bottom line. 

Pro forma balance sheets are also helpful for showing the financial impact of proposed changes to your business, such as opening a new location or closing a current location. 

Pro forma cash flow statement

A pro forma cash flow statement shows a company's expected cash inflows and outflows at a specific time in the future. They can be short-term (for daily operations), medium-term (for financial projections), or long-term (for investments or strategic decisions).

You might use a pro forma statement if you want to predict how new products will impact your company's cash flow or if you’re considering switching to a subscription-based business model.

Of course, this is important because cash runway is critical to a company’s ability to continue growing, pay employees, and invest in product development. 

Looking for a pro forma cash flow statement in Excel format? You're in luck.

Click here to download the free Cash Flow Statement: Excel Format. 

Benefits of using pro forma analysis

Pro forma analysis (creating pro forma financial documents like the pro forma balance sheet that show hypothetical scenarios of your business) is a valuable tool for your financial planning and analysis process.

These project

1. Financial planning and forecasting

A pro forma template can give you a clear idea of your company's financial health and a possible future outlook. It can give you a sense of whether your business is on track to meet its financial goals and help you identify potential problems that may arise down the road.

For example, a business might release a pro forma income statement to provide a goal or benchmark for the business to hit. This is called a pro forma projection.

Such a pro forma income statement would be based on a financial forecast . It would consider items like a company's current and future operations, financial documents, net profit, projected cash flow , and overall financial health.

A simple financial modeling exercise is to create pro forma projections to show how your company's capital investment might grow over time.

2. Decision-making

This analysis can help you make informed decisions about investments, marketing strategies, pricing tiers, and other aspects of your business plan.

For this reason, it's a best practice to create pro forma statements as in-depth financial forecasts  to show the possible future states of your business.

Then you can reverse engineer how to get there.

3. Asset and liability management

Pro forma templates can give you insight into allocating business resources and identifying potential risks that may impact your business.

Let's say you’re considering expanding your business by opening a new location. You can use the pro forma template to estimate the costs associated with this expansion and if it's feasible.

This includes the cost of leasing or purchasing a new facility, as well as the cost of hiring new staff. You can also use the pro forma template to estimate the expected revenue from this new location. 

4. Securing investments

Pro forma analysis can demonstrate to potential investors that your business has a great chance of being financially successful in various future situations. 

Investors could also use pro forma analysis to assess the potential return on their investment. Almost every fundraiser needs pro forma statements so that potential investors can understand the implications of the new capital infusion. 

5. Evaluating protective mergers

Companies often decide to merge with the hope that the combined business will be worth more than the sum of its parts. But, not all mergers create value for shareholders, and some can even cause a loss. 

One way to estimate whether a merger will create or destroy shareholder value is to look at the pro forma financial statements and determine if a merger is in the best interests of your business.

Limitations of pro forma analysis

Pro forma analysis is an excellent tool for businesses to get a handle on their financial situation and make informed decisions about their growth. However, there are some limitations to be aware of.

1. Based on assumptions

Pro forma analysis is based on assumptions about the future, such as future sales, costs, and operating expenses. These assumptions may not always be accurate, which can cause misleading results. 

It is also dependent on the information that you input into it. This means that if there are any errors in the data, the analysis will not be accurate.

The Securities and Exchange Commission (SEC) is wary of pro forma statements because they are very much based on assumptions, not generally accepted accounting principles.

2. It may not consider external forces

Another limitation is that pro forma analysis does not consider all factors that can affect a business's financial situation. This means that it may not consider external forces that could impact your business—such as the economy, black swan events (like COVID), or unforeseen changes in the market. 

Luckily,  scenario analysis and sensitivity analysis exist for these situation types.

Pro forma financial statement terms to know

There are a few key terms that you should know when looking at pro forma financial statements.

• Gross margin: The difference between a company's revenue and the cost of goods sold. It’s in the form of a percentage.
• Operating expenses: The costs associated with running a business, such as rent,  utilities, and salaries.
• Net income: The difference between a company's revenue and expenses. It is also in the form of a percentage.
• EBITDA : Earnings before interest, taxes, depreciation, and amortization. It is a measure of a company's profitability that excludes these items.

Conclusion: download our free pro forma statement templates for Excel or Google Sheets

Looking for a pro forma statement template to create your own financial statements? We've got you covered! 

Enter your work email information, and you'll be able to see how your business is performing.

3-statement model pro forma template 

Download it here .

A 3-statement model forecasts a company's future financial performance based on its past performance, intending to predict things like revenue, expenses, and cash flow. It combines three key reports: the income statement, balance sheet, and cash flow statement.

What's inside the 3-statement model template:

This template combines three key reports:

• Income statement: One of the most critical financial statements. It reveals the business's ability to make a profit (and the extent of that profit).
• Balance sheet: When paired with the profit and loss statement, the balance sheet shows how much cash or investment you need to support the sales and profits on the income statement. Net income from the income statement flows into the balance sheet as a change in retained earnings (adjusted for payment of dividends).
• Cash flow: This statement displays the change in cash over a period, along with both the beginning and ending balances for that period in cash.

Your cash flow statement takes net income and adjusts it for non-cash expenses. From there, you can reference changes in the balance sheet to find cash usage and receipt patterns.

Budget vs. actuals pro forma template

What is a budget vs. actuals statement? 

A budget vs. actuals statement is a financial document that compares an organization's budgeted income and expenses to its actual income and expenses. This statement can help organizations track their progress toward their financial goals and identify areas where they may need to make adjustments.

Download it here.

Related Articles

How to create & use pro forma statements

What is headcount forecasting? [Free headcount forecasting Excel template]

How to prepare financial statements: a quick guide for FP&A teams

Pro Forma Financial Statements: What They Are and Why You Need Them

So your business is chugging right along, and you’ve had great financial results for years. You have no problem proving to a potential investor or lender that your company is doing well. But…you’ve got big things in the works. Maybe you’re selling off part of the company, or acquiring another. Now you need an accounting tool that will help you see how the numbers will change with this transition.

But generally accepted accounting principles (known as GAAP) only look at historical financial statements and don’t help you predict the future.

Short of having a crystal ball, pro forma financial statements can help you predict things like net income and gross profit in the future. Using these financial statements, you can plan for the future and lower your risk, as well as attract investors or get approved for financing.

Accelerate your path to better funding

Build business credit history, see your business credit-building impact, and secure new funding options — only with Nav Prime.

What are Pro Forma Financial Statements?

Pro forma financial statements essentially forecast the future. Standard accounting statements like the balance sheet look at historical financial information, but pro forma documents look forward to help you predict future income through different types of accounting statements. A pro forma small business statement may include projected revenue, estimated expenses, and cash flow for three to five years.

Types of Pro Forma Statements

• Full-year pro forma projection
• Historical with acquisition pro forma projection
• Financing or investment pro forma projection
• Risk analysis pro forma projection

There’s no single pro forma income statement. In fact, there are several pro forma financial statements, and you may want to use more than one to get a full financial picture of your business.

Full-Year Pro Forma Projection

This pro forma projection includes a business’s year-to-date results as well as forecasted income and expenses for the rest of the year to provide a full year view. This pro forma projection is useful to investors and lenders, who want reassurance that your business is slated for profitability.

Historical with Acquisition Pro Forma Projection

If you plan to acquire another business, this is the right pro forma statement for you. It combines your business’s accounting results with that of the business you want to acquire, subtracting acquisition costs and synergies, and therefore shows a rough sketch of how the acquisition will blend into your balance sheet.

Financing or Investment Pro Forma Projection

If you plan to seek funding from investors or  small business loans , you may be asked for revenue projections. This statement specifically deals with how your company’s results will change if you receive an infusion of capital. You may want to create financial projections for different investment amounts to cover your bases.

Risk Analysis Pro Forma Projection

Whenever you’re engaged in financial decision-making, you need to know best- and worst-case scenarios. That’s where pro forma risk analysis comes in handy. By creating pro forma reports for a variety of scenarios, you can see the expected results of how a decision will have an impact on your bottom line and make your decisions accordingly.

Three Most Important Pro Forma Financial Statements

In addition to the pro forma financial statements listed above, there are others that you will find useful in your company, even if you’re not planning a major change like taking on investments or acquiring another company.

• Pro forma income statements
• Pro forma balance sheets
• Pro forma cash flow statements

Pro Forma Income Statements

Also known as a profit and loss statement or P&L, this accounting document shows sales transactions and expenses, as well as cost of goods sold (COGS)/cost of services sold and projected net income and profit.

Pro Forma Balance Sheets

The pro forma balance sheet looks at a forecast after a change or proposed transaction, like financing, adding a line of credit, a big capital investment, or acquisition. It includes current assets and total liabilities, as well as accounts receivable, cash and cash equivalents, accounts payable, and inventories.

Pro Forma Cash Flow Statements

Another of the pro forma reports you should know about is the cash flow statement. It looks at the likely amount of cash flowing into and out of the business over a future period, based on different scenarios.

Why Create Pro Forma Statements?

So if you’re already using GAAP financial statements and financial reports, why would you go to the trouble of creating pro forma financial information? There are several situations where having a pro forma income statement or other report can come in handy.

Access better funding options with a solution you can’t get anywhere else

Improve your business’s financial health profile, unlock better financing options, and get funded — only at Nav.

Seeking Financing

Whether you’re applying for an SBA loan or looking to bring investors on, the individuals you want to work with want reassurance that your business is a good investment. Looking back at historical financial statements is helpful, but if you’re planning big changes, the past may not be an accurate portrayal of what the future holds. 

Lenders and investors want reasonable assurance that their investment will not only be paid back, but that they will see a positive return on it. Pro forma financial information can help them assess that likelihood.

Planning for the Future

While we can never know what the future holds, we can make some educated forecasts about what it might look like with pro forma income statements. Looking at a few scenarios ranging from worst case to best, you can see what the impact of these changes might be and use this information to guide your decisions.

Anticipating Changes

If you are considering acquiring another company or pivoting the direction your business is headed, you’ll want to understand how that will impact your income. Creating a pro forma cash flow statement can help you determine how quickly you will become liquid after this transaction, and you can also determine how many more liabilities it will create.

Nav’s Final Word: Pro Forma Financial Statements

Yes, creating pro forma statements requires more work, but it pays off in showing you exactly what your future net income, liabilities, and cash on hand would be under certain circumstances.

Pro forma projections aren’t written in stone. Certainly, conditions will change, and that will impact your balance sheet. But these accounting tools can provide you (and your investors) peace of mind in knowing that a financial move is likely to pay off over time.

To create pro forma financial statements, you can enlist the help of a certified public accountant (CPA) or use a template.

Nav can help you find business financing, small business loans, or business credit cards you’re most likely to qualify for, using data like your business credit scores and annual revenue. Sign up for a Nav account to see your options.

Frequently Asked Questions About Small Business Pro Forma Statements

What is the difference between an income statement and a pro forma income statement?

The word “pro forma” means “as a matter of form” in Latin. A pro forma income statement is a type of income statement that serves as a financial forecast, using financial modeling based on  past financial reports and your future business plans.

What are two items that are excluded from pro forma income?

Pro forma income statements may not include expenses that aren’t recurring or expenses that aren’t considered normal to the company’s operations. This can include charges for restructuring, write-offs or paydowns for intangible assets, or expenses that the company uses equity to pay with. Because these aren’t part of regular operating income, they don’t factor into the future that your pro forma income statements are projecting.

What are examples of pro forma financial statements?

Common pro forma financial statements include: – Pro forma income statements – Pro forma balance sheets – Pro forma cash flow statements Each of these can be used for the following purposes:  – Full-year pro forma projection – Historical with acquisition pro forma projection – Financing or investment pro forma projection – Risk analysis pro forma projection

Is a pro forma the same as a P&L?

A P&L (or profit and loss statement) is the same as an income statement, but they are not the same as a pro forma financial statement. You can have a pro forma P&L just as you would a pro forma income statement. Business owners use pro forma income statements to make projections on their financial position in the future and help them make better business decisions.

This article was originally written on June 2, 2020 and updated on October 7, 2022.

Rate This Article

This article currently has 15 ratings with an average of 4.5 stars.

Susan Guillory

Susan Guillory is an intuitive business coach and content magic maker. She’s written several business books and has been published on sites including Forbes, AllBusiness, and SoFi. She writes about business and personal credit, financial strategies, loans, and credit cards.

Have at it! We'd love to hear from you and encourage a lively discussion among our users. Please help us keep our site clean and protect yourself. Refrain from posting overtly promotional content, and avoid disclosing personal information such as bank account or phone numbers. Reviews Disclosure: The responses below are not provided or commissioned by the credit card, financing and service companies that appear on this site. Responses have not been reviewed, approved or otherwise endorsed by the credit card, financing and service companies and it is not their responsibility to ensure all posts and/or questions are answered.

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Save my name and email in this browser for the next time I comment.

Free Financial Templates for a Business Plan

By Andy Marker | July 29, 2020

• Share on Facebook
• Share on LinkedIn

Link copied

In this article, we’ve rounded up expert-tested financial templates for your business plan, all of which are free to download in Excel, Google Sheets, and PDF formats.

Included on this page, you’ll find the essential financial statement templates, including income statement templates , cash flow statement templates , and balance sheet templates . Plus, we cover the key elements of the financial section of a business plan .

Financial Plan Templates

Download and prepare these financial plan templates to include in your business plan. Use historical data and future projections to produce an overview of the financial health of your organization to support your business plan and gain buy-in from stakeholders

Business Financial Plan Template

Use this financial plan template to organize and prepare the financial section of your business plan. This customizable template has room to provide a financial overview, any important assumptions, key financial indicators and ratios, a break-even analysis, and pro forma financial statements to share key financial data with potential investors.

Download Financial Plan Template

Word | PDF | Smartsheet

Financial Plan Projections Template for Startups

This financial plan projections template comes as a set of pro forma templates designed to help startups. The template set includes a 12-month profit and loss statement, a balance sheet, and a cash flow statement for you to detail the current and projected financial position of a business.

‌ Download Startup Financial Projections Template

Excel | Smartsheet

Income Statement Templates for Business Plan

Also called profit and loss statements , these income statement templates will empower you to make critical business decisions by providing insight into your company, as well as illustrating the projected profitability associated with business activities. The numbers prepared in your income statement directly influence the cash flow and balance sheet forecasts.

Pro Forma Income Statement/Profit and Loss Sample

Use this pro forma income statement template to project income and expenses over a three-year time period. Pro forma income statements consider historical or market analysis data to calculate the estimated sales, cost of sales, profits, and more.

‌ Download Pro Forma Income Statement Sample - Excel

Small Business Profit and Loss Statement

Small businesses can use this simple profit and loss statement template to project income and expenses for a specific time period. Enter expected income, cost of goods sold, and business expenses, and the built-in formulas will automatically calculate the net income.

‌ Download Small Business Profit and Loss Template - Excel

3-Year Income Statement Template

Use this income statement template to calculate and assess the profit and loss generated by your business over three years. This template provides room to enter revenue and expenses associated with operating your business and allows you to track performance over time.

Download 3-Year Income Statement Template

For additional resources, including how to use profit and loss statements, visit “ Download Free Profit and Loss Templates .”

Cash Flow Statement Templates for Business Plan

Use these free cash flow statement templates to convey how efficiently your company manages the inflow and outflow of money. Use a cash flow statement to analyze the availability of liquid assets and your company’s ability to grow and sustain itself long term.

Simple Cash Flow Template

Use this basic cash flow template to compare your business cash flows against different time periods. Enter the beginning balance of cash on hand, and then detail itemized cash receipts, payments, costs of goods sold, and expenses. Once you enter those values, the built-in formulas will calculate total cash payments, net cash change, and the month ending cash position.

Download Simple Cash Flow Template

12-Month Cash Flow Forecast Template

Use this cash flow forecast template, also called a pro forma cash flow template, to track and compare expected and actual cash flow outcomes on a monthly and yearly basis. Enter the cash on hand at the beginning of each month, and then add the cash receipts (from customers, issuance of stock, and other operations). Finally, add the cash paid out (purchases made, wage expenses, and other cash outflow). Once you enter those values, the built-in formulas will calculate your cash position for each month with.

‌ Download 12-Month Cash Flow Forecast

3-Year Cash Flow Statement Template Set

Use this cash flow statement template set to analyze the amount of cash your company has compared to its expenses and liabilities. This template set contains a tab to create a monthly cash flow statement, a yearly cash flow statement, and a three-year cash flow statement to track cash flow for the operating, investing, and financing activities of your business.

Download 3-Year Cash Flow Statement Template

For additional information on managing your cash flow, including how to create a cash flow forecast, visit “ Free Cash Flow Statement Templates .”

Balance Sheet Templates for a Business Plan

Use these free balance sheet templates to convey the financial position of your business during a specific time period to potential investors and stakeholders.

Small Business Pro Forma Balance Sheet

Small businesses can use this pro forma balance sheet template to project account balances for assets, liabilities, and equity for a designated period. Established businesses can use this template (and its built-in formulas) to calculate key financial ratios, including working capital.

Download Pro Forma Balance Sheet Template

Monthly and Quarterly Balance Sheet Template

Use this balance sheet template to evaluate your company’s financial health on a monthly, quarterly, and annual basis. You can also use this template to project your financial position for a specified time in the future. Once you complete the balance sheet, you can compare and analyze your assets, liabilities, and equity on a quarter-over-quarter or year-over-year basis.

Download Monthly/Quarterly Balance Sheet Template - Excel

Yearly Balance Sheet Template

Use this balance sheet template to compare your company’s short and long-term assets, liabilities, and equity year-over-year. This template also provides calculations for common financial ratios with built-in formulas, so you can use it to evaluate account balances annually.

Download Yearly Balance Sheet Template - Excel

For more downloadable resources for a wide range of organizations, visit “ Free Balance Sheet Templates .”

Sales Forecast Templates for Business Plan

Sales projections are a fundamental part of a business plan, and should support all other components of your plan, including your market analysis, product offerings, and marketing plan . Use these sales forecast templates to estimate future sales, and ensure the numbers align with the sales numbers provided in your income statement.

Basic Sales Forecast Sample Template

Use this basic forecast template to project the sales of a specific product. Gather historical and industry sales data to generate monthly and yearly estimates of the number of units sold and the price per unit. Then, the pre-built formulas will calculate percentages automatically. You’ll also find details about which months provide the highest sales percentage, and the percentage change in sales month-over-month. 

Download Basic Sales Forecast Sample Template

12-Month Sales Forecast Template for Multiple Products

Use this sales forecast template to project the future sales of a business across multiple products or services over the course of a year. Enter your estimated monthly sales, and the built-in formulas will calculate annual totals. There is also space to record and track year-over-year sales, so you can pinpoint sales trends.

Download 12-Month Sales Forecasting Template for Multiple Products

3-Year Sales Forecast Template for Multiple Products

Use this sales forecast template to estimate the monthly and yearly sales for multiple products over a three-year period. Enter the monthly units sold, unit costs, and unit price. Once you enter those values, built-in formulas will automatically calculate revenue, margin per unit, and gross profit. This template also provides bar charts and line graphs to visually display sales and gross profit year over year.

Download 3-Year Sales Forecast Template - Excel

For a wider selection of resources to project your sales, visit “ Free Sales Forecasting Templates .”

Break-Even Analysis Template for Business Plan

A break-even analysis will help you ascertain the point at which a business, product, or service will become profitable. This analysis uses a calculation to pinpoint the number of service or unit sales you need to make to cover costs and make a profit.

Break-Even Analysis Template

Use this break-even analysis template to calculate the number of sales needed to become profitable. Enter the product's selling price at the top of the template, and then add the fixed and variable costs. Once you enter those values, the built-in formulas will calculate the total variable cost, the contribution margin, and break-even units and sales values.

Download Break-Even Analysis Template

For additional resources, visit, “ Free Financial Planning Templates .”

Business Budget Templates for Business Plan

These business budget templates will help you track costs (e.g., fixed and variable) and expenses (e.g., one-time and recurring) associated with starting and running a business. Having a detailed budget enables you to make sound strategic decisions, and should align with the expense values listed on your income statement.

Startup Budget Template

Use this startup budget template to track estimated and actual costs and expenses for various business categories, including administrative, marketing, labor, and other office costs. There is also room to provide funding estimates from investors, banks, and other sources to get a detailed view of the resources you need to start and operate your business.

Download Startup Budget Template

Small Business Budget Template

This business budget template is ideal for small businesses that want to record estimated revenue and expenditures on a monthly and yearly basis. This customizable template comes with a tab to list income, expenses, and a cash flow recording to track cash transactions and balances.

Download Small Business Budget Template

Professional Business Budget Template

Established organizations will appreciate this customizable business budget template, which  contains a separate tab to track projected business expenses, actual business expenses, variances, and an expense analysis. Once you enter projected and actual expenses, the built-in formulas will automatically calculate expense variances and populate the included visual charts. 

‌ Download Professional Business Budget Template

For additional resources to plan and track your business costs and expenses, visit “ Free Business Budget Templates for Any Company .”

Other Financial Templates for Business Plan

In this section, you’ll find additional financial templates that you may want to include as part of your larger business plan.

Startup Funding Requirements Template

This simple startup funding requirements template is useful for startups and small businesses that require funding to get business off the ground. The numbers generated in this template should align with those in your financial projections, and should detail the allocation of acquired capital to various startup expenses.

Download Startup Funding Requirements Template - Excel

Personnel Plan Template

Use this customizable personnel plan template to map out the current and future staff needed to get — and keep — the business running. This information belongs in the personnel section of a business plan, and details the job title, amount of pay, and hiring timeline for each position. This template calculates the monthly and yearly expenses associated with each role using built-in formulas. Additionally, you can add an organizational chart to provide a visual overview of the company’s structure. 

Download Personnel Plan Template - Excel

Elements of the Financial Section of a Business Plan

Whether your organization is a startup, a small business, or an enterprise, the financial plan is the cornerstone of any business plan. The financial section should demonstrate the feasibility and profitability of your idea and should support all other aspects of the business plan. 

Below, you’ll find a quick overview of the components of a solid financial plan.

• Financial Overview: This section provides a brief summary of the financial section, and includes key takeaways of the financial statements. If you prefer, you can also add a brief description of each statement in the respective statement’s section.
• Key Assumptions: This component details the basis for your financial projections, including tax and interest rates, economic climate, and other critical, underlying factors.
• Break-Even Analysis: This calculation helps establish the selling price of a product or service, and determines when a product or service should become profitable.
• Pro Forma Income Statement: Also known as a profit and loss statement, this section details the sales, cost of sales, profitability, and other vital financial information to stakeholders.
• Pro Forma Cash Flow Statement: This area outlines the projected cash inflows and outflows the business expects to generate from operating, financing, and investing activities during a specific timeframe.
• Pro Forma Balance Sheet: This document conveys how your business plans to manage assets, including receivables and inventory.
• Key Financial Indicators and Ratios: In this section, highlight key financial indicators and ratios extracted from financial statements that bankers, analysts, and investors can use to evaluate the financial health and position of your business.

Need help putting together the rest of your business plan? Check out our free simple business plan templates to get started. You can learn how to write a successful simple business plan  here . 

Visit this  free non-profit business plan template roundup  or download a  fill-in-the-blank business plan template  to make things easy. If you are looking for a business plan template by file type, visit our pages dedicated specifically to  Microsoft Excel ,  Microsoft Word , and  Adobe PDF  business plan templates. Read our articles offering  startup business plan templates  or  free 30-60-90-day business plan templates  to find more tailored options.

Discover a Better Way to Manage Business Plan Financials and Finance Operations

Empower your people to go above and beyond with a flexible platform designed to match the needs of your team — and adapt as those needs change. 

The Smartsheet platform makes it easy to plan, capture, manage, and report on work from anywhere, helping your team be more effective and get more done. Report on key metrics and get real-time visibility into work as it happens with roll-up reports, dashboards, and automated workflows built to keep your team connected and informed. 

When teams have clarity into the work getting done, there’s no telling how much more they can accomplish in the same amount of time.  Try Smartsheet for free, today.

Discover why over 90% of Fortune 100 companies trust Smartsheet to get work done.

Pro Forma Template: What Are They? How To Use Them

Jump to Section

What is a pro forma template.

A pro forma template, also known as a pro forma financial statement, is a document used to project future financial performance based on hypothetical scenarios. In the context of accounting, pro forma templates will help you make decisions based on hypothetical scenarios as well.

They can also help you formulate a business plan , obtain investor funding, and more. By having a pro forma template ready, you can create your financial documents faster and more uniformly every time you need them.

Understanding A Pro Forma Statement

There are numerous types of pro forma documents. They may be required in certain situations, such as for public companies or during mergers and acquisitions. More or less, pro forma templates exist to give you a jumpstart on understanding your company’s financial health at a glance or when presenting to board members and stockholders.

You can use a template to create the following types of financial documents:

• Income statements
• Balance sheets
• Cash flow statements
• Owner’s equity statements
• Notes to financial statements
• Annual pro forma projections
• Investment projections
• Risk analysis

While pro forma templates are relatively straightforward to use, ensure that you seek legal advice from corporate lawyers to help you develop the right set of templates the first time you draft them. For some pro forma templates, ensure that they meet all applicable accounting rules, including GAAP principles and state laws.

Using A Pro Forma Template

The first step you should take with a pro forma template is to save a master copy of it in a safe, accessible location. There is always a chance for deletion across numerous duplications and file changes, which means that you should save it on a flash driver, external hard drive, or in the cloud. In case it gets deleted, you always have the original to back you up.

After saving your pro forma template, you will then take the following steps when using it:

• Use a form to help you automatically collect information entered into the template
• Enter financial data to help forecast income and cash flow
• Create different scenarios to map out how cash flow is affected as variables change
• Share it with an expert to make sure you are using it properly
• Make a copy of the original to avoid an accidental deletion
• Consider naming conventions for your files by statement type

The use of a pro forma template depends upon the type you are using. Some provide you with blank space to enter specific values, while others are just a set of guidelines. By inputting these variables, you can calculate your profit and loss under the template’s author’s guidelines.

As you can see, pro forma templates are simply financial documents that you can use for everyday business needs. It is imperative that you hire incorporation lawyers for specialized projects or one-time needs. Not addressing the critical details of business documents can negatively impact you.

Image via Pexels by Lukas

Pro Forma Template Samples

There are numerous resources available online regarding the development of pro forma templates that you case use to report on your business’s financial health. Spend some time looking for the right sample since several do not always address specific business needs.

Here are three templates that you can view online:

• Smartsheet pro forma template sample
• Freshbooks pro forma template sample
• Spreadsheet 123 pro forma template sample

When using these templates, you can generally input the data you need to populate complete financial statements. However, you will not own the software that stores the templates, which means you need to download updates every time. There are several ways and methods available to make your own pro forma template to consider.

You should also be able to easily edit your pro forma template since you will need to update your associates, employees, and investors on-the-fly occasionally. The most straightforward way to make your pro forma is by ensuring that you have your business objectives in mind first.

How Do You Make Your Own Pro Forma?

The best way to make your own pro forma statement template is by starting with the right type of document in the first place. You can find samples online or hire corporate lawyers to draft the templates you use to create financial statements.

However, here are the next steps forward that you can take to make your own pro forma templates:

• Review pro forma template samples to establish what should go into your financial documents
• Consider the elements that should be included in every statement
• Set a goal for sales over certain period of time
• Figure out how much the cost of production will be to support those sales
• Consider all other costs associated with running the business
• Add all of these financial data points to the model to predict net cash flow
• Set-up periodic reviews of your pro forma templates to ensure that they are still up-to-date

If you decide to find a pro forma template online, seek advice from a trusted colleague or attorney. Online templates tend to miss some critical notes when it comes to personalization and customization of your needs. However, some can be customized to your needs. The process of finding the right pro forma template can be frustrating, especially when there are question marks in your mind.

Simply put, it is more cost-effective to hire corporation lawyers the first time around you are drafting pro forma templates. Doing so will save you money, time, and stress over the long-run. You can even use planning with pro formas to start your business by hiring corporate lawyers to draft your documents instead of relying on templates created for hypothetical organizations or those serving other industries.

Get Free Bids to Compare

Leverage our network of lawyers, request free bids, and find the right lawyer for the job.

Planning With Pro Formas To Start Your Business

In the previous section, we addressed the importance of legal advice. However, the cost of hiring an attorney or vetting one can turn many business owners away from engaging in this critical part of the process. Keep in mind that legal mistakes can come back to haunt you later, which means that it is essential to get your pro forma templates right from the first day you use them.

ContractsCounsel has made this process as easy as possible on business owners:

• Sign up for our service at no cost
• Post your project to our platform
• Begin receiving proposals from licensed and vetted attorneys

That is it. From one single location, you can receive numerous proposals and prices for your pro forma template project. Not only is the process convenient, but it also satisfies the need to draft your templates correctly and adequately for your jurisdiction while keeping your financial statements more uniform.

Working With A Lawyer For Business Formation

When starting a business, you will need to file Articles of Incorporation with your secretary of state’s office to receive a Certificate of Incorporation . However, there may be other entities that are better suited for your situation, and other legal requirements may apply, including the drafting of an operating agreement .

Working with a lawyer for a business formation is smart since you will effectively and efficiently avoid making legal mistakes, negatively impacting your company’s future. Corporate lawyers also have the experience and capacity to determine which documents you may need to stay compliant and prevent future disputes with clients, contractors, partners, and other third-parties you serve.

Get Pro Forma Template Help with ContractsCounsel

Instead of leaving your pro forma templates to basic internet searches and best guesses, get the right document that you need the first time around. Sign up for ContractsCounsel today with no upfront cost to you and start receiving proposals today.

Legal Subscription Plans

ContractsCounsel made it very easy to find a lawyer to help our company with its legal needs.

Meet some of our Lawyers

I'm a Washington-licensed lawyer specializing in trademark practice and with an extensive trademark education and academic background. I currently work with domestic and international businesses seeking trademark protection in the U.S. by conducting trademark searches, providing legal advice, submitting USPTO applications, and preparing responses to office actions. I'm passionate about trademark law and always looking forward to helping small and medium businesses promote their value by having a registered federal trademark. If you have questions or concerns about trademark/copyright/IP licensing and require legal advice, feel free to contact me and we can have a first chat.

Diana is a registered patent attorney and licensed to practice law in Florida and in federal courts in Florida and in Texas. For nearly a decade, Diana has been known as the go-to brand builder, business protector, and rights negotiator. Diana works with individual inventors, startups, and small to medium-sized closely held business entities to build, protect, and leverage a robust intellectual property portfolio comprising patents, trademarks, copyrights, trade dress, and trade secrets.

Firm rated best ADR firm for Wisconsin and won an award for cultural innovation in dispute resolution from acquisition international magazine in 2016 and it was rated "Best of Brookfield" by Best Businesses in 2015. Attorney Maxwell C. Livingston was rated 10 best in Labor & Employment Law by American Institute of Legal Counsel and 40 Under 40 by American Society of Legal Advocates for 2016; he also won 10 Best by American Institute of Family Law Attorneys. He is licensed in Wisconsin in all state and federal courts, and in the 7th Circuit Court of Appeals, wherein he won a landmark decision in McCray v. Wielke.

Anatalia S.

High quality work product at affordable prices.

I am a sole practitioner who has been in practice for over 25 years. I have represented many small businesses during this time. Let me bring my expertise to your business.

Mr. Pomeranz serves as the principal of Pomeranz Law PLLC, a boutique law firm representing clients across myriad industries and verticals. Before founding the firm, Mr. Pomeranz served as Senior Vice President, Legal & Compliance and General Counsel of Mortgage Connect, LP in 2017. Mr. Pomeranz also served as Counsel, Transactions for Altisource Portfolio Solutions S.A. (NASDAQ: ASPS) beginning in 2013, and was based in the company’s C-Suite in Luxembourg City, Luxembourg. Mr. Pomeranz began his career with Mainline Information Systems, Inc. as an in-house attorney.

Rinky S. Parwani began her career practicing law in Beverly Hills, California handling high profile complex litigation and entertainment law matters. Later, her practice turned transactional to Lake Tahoe, California with a focus on business startups, trademarks, real estate resort development and government law. After leaving California, she also served as in-house counsel for a major lending corporation headquartered in Des Moines, Iowa as well as a Senior Vice President of Compliance for a fortune 500 mortgage operation in Dallas, Texas prior to opening Parwani Law, P.A. in Tampa, Florida. She has represented various sophisticated individual, government and corporate clients and counseled in a variety of litigation and corporate matters throughout her career. Ms. Parwani also has prior experience with state and federal consumer lending laws for unsecured credit cards, revolving credit, secured loans, retail credit, sales finance and mortgage loans. She also has served as a special magistrate and legal counsel for numerous Florida County Value Adjustment Boards. Her practice varies significantly from unique federal and state litigation cases to transactional matters. Born and raised in Des Moines, Iowa, Ms. Parwani worked in private accounting for several years prior to law school. Her background includes a Certified Public Accountant (CPA) certificate from Iowa (currently the license is inactive) and a Certified Management Accountant (CMA) designation (currently the designation is inactive). Ms. Parwani or the firm is currently a member of the following organizations: Hillsborough County Bar Association, American Bar Association, Tampa Bay Bankruptcy Bar Association, National Association of Consumer Bankruptcy Attorneys, and the American Immigration Lawyers Association. She is a Fellow of the American Bar Association. Ms. Parwani is a frequent volunteer for Fox Channel 13 Tampa Bay Ask-A-Lawyer. She has published an article entitled "Advising Your Client in Foreclosure" in the Stetson Law Review, Volume 41, No. 3, Spring 2012 Foreclosure Symposium Edition. She is a frequent continuing legal education speaker and has also taught bankruptcy seminars for the American Bar Association and Amstar Litigation. She was commissioned by the Governor of Kentucky as a Kentucky Colonel. In addition, she teaches Immigration Law, Bankruptcy Law and Legal Research and Writing as an adjunct faculty instructor at the Hillsborough Community College Ybor campus in the paralegal studies program.

Full-service boutique law firm providing personalized services in business law, trademarks, and real estate closings/title work.

Respected, driven, ethical, and high energy legal and business professional with strong focus on litigation, contracts and compliance issues. Critical management experience includes client development, developing core initiatives, and forecasting risk in major corporations. Strong legal research, analytical and problem solving skills with demonstrated adaptability in a multifaceted legal practice including delivering high value results in a Fortune 10 environment. Core competencies include: Tactical and strategic legal direction and support to clients which includes contract negotiation, drafting and review, business planning, and a passion for relationship management. Excellent legal research, writing, analytical and problem solving skills including legal training and compliance with regulatory requirements and corporate policies. Coordinates with in-house legal and business resources for team building with excellent verbal communication skills, coaching, and leadership.

Brandon is a Texas Super Lawyer®, meaning he is among the top 2.5% of attorneys in his state. He has designed his practice to provide a unique ecosystem of legal support services to business and entrepreneurs, derived from his background as a federal district law clerk, published biochemist, and industry lecturer. Brandon is fluent in Spanish, an Eagle Scout, and actively involved with the youth in his community. He loves advocating for his clients and thinks he may never choose to retire.

Richard is a wizard at taking on bureaucracies and simply getting the job done. His clients value his straight-forward counsel and his ability to leverage a top-notch legal staff for efficient and effective results. Richard is a professional engineer, professor of law, and has been named among the top 2.5% of attorneys in Texas by the Super Lawyers®. When he is not driving results for his clients, Richard can be found with his small herd on his Texas homestead.

Find the best lawyer for your project

Need help with a legal contract.

Post Your Project

Hire Your Lawyer

CONTRACT LAWYERS BY TOP CITIES

• Austin Business Lawyers
• Boston Business Lawyers
• Chicago Business Lawyers
• Dallas Business Lawyers
• Denver Business Lawyers
• Houston Business Lawyers
• Los Angeles Business Lawyers
• New York Business Lawyers
• Phoenix Business Lawyers
• San Diego Business Lawyers
• Tampa Business Lawyers

Legal Plans

Learn about contracts.

• 501c3 Application
• 93a Demand Letter
• Accelerated Clinical Trial Agreement
• Acceptable Use Policy
• Acceptance Agreement
• Accommodation Agreement
• Account Agreement
• Accountability Agreement
• Accounting Services Agreement
• Accounts Receivable Purchase Contract

other helpful articles

• How much does it cost to draft a contract?
• Do Contract Lawyers Use Templates?
• How do Contract Lawyers charge?
• Business Contract Lawyers: How Can They Help?
• What to look for when hiring a lawyer

Quick, user friendly and one of the better ways I've come across to get ahold of lawyers willing to take new clients.

Contracts Counsel was incredibly helpful and easy to use. I submitted a project for a lawyer's help within a day I had received over 6 proposals from qualified lawyers. I submitted a bid that works best for my business and we went forward with the project.

I never knew how difficult it was to obtain representation or a lawyer, and ContractsCounsel was EXACTLY the type of service I was hoping for when I was in a pinch. Working with their service was efficient, effective and made me feel in control. Thank you so much and should I ever need attorney services down the road, I'll certainly be a repeat customer.

I got 5 bids within 24h of posting my project. I choose the person who provided the most detailed and relevant intro letter, highlighting their experience relevant to my project. I am very satisfied with the outcome and quality of the two agreements that were produced, they actually far exceed my expectations.

How It Works

Want to speak to someone.

Get in touch below and we will schedule a time to connect!

Find lawyers and attorneys by city

Financial Projections for a Business Plan

 pro forma financial projections for a business plan.

Writing a business plan is hard enough for a startup organization or a business seeking to expand services.  To worsen the process, an essential segment of any business plan is its pro forma financial statement creation.  For the most part, pro forma financial statements must be created in Excel and intertwined between the various pro forma financial statements, such as the income statement, profit and loss statement, cash budget, and balance sheet, to create a pro forma financial model.  Without the help of a professional, overcoming the seemingly insurmountable challenge of creating pro forma financial statements is disheartening at times, at best.

Fortunately, Quality Business Plan offers prospective entrepreneurs and established business owners the opportunity to have our pro forma financial projection consultant, Paul Borosky, MBA., create and customize pro forma statements for you!  Also, we offer clients the opportunity to purchase professionally created pro forma financial projection templates for you to use as a foundation for their financial model.

FREE Financial Projections Tutorials!!!

  pro forma financial projection section only for a business plan, basic financial projection section only.

The "Bottom Shelf" pro forma financial statements section ONLY is an excellent choice for clients who need basic pro forma financials to finish their business plans. For this selection, pro forma financials will include the following:

• Pro Forma Financial Statements Section Completed by an MBA Financial Projection Professional.
• 15 Minute Meeting with an MBA Financial Projection Professional.
• Page Count: 6 Pages
• Pro Forma Financial Assumptions.
• 12-month profit and loss statements.
• Pro forma Income statement for 5 years.
• Pro forma Balance sheet for 5 years. 
• Restrictions:  For 2 employees or less AND $200,00 or less for funding.  

Basic Financial Projections Only

Advanced Pro Forma Financial Projection Section ONLY

The Advanced Pro Forma Financial Statements section ONLY is a good choice for clients needing a moderate level of pro forma financials with color charts and graphs to finish their business plans. For this selection, financials will include:

• Pro Forma Financial Section Completed by an MBA Financial Projection Professional.
• 20 Minute Meeting with an MBA Financial Projection Professional.
• Page Count: 15-18 pgs.
• Color Charts and Graphs
• 24-month profit and loss statements.
• Common size quarterly pro forma statement profit and loss.
• Pro Forma Income statements for 5 years.
• Pro Forma Balance sheet for 5 years. 
• Break-even analysis
• Restrictions: For 30 employees or less AND Funding of $1,000,000 or less.

Advanced Financial Projections Only

Complete Pro Forma Financial Projection Section ONLY

The Complete Financial Projections section ONLY is an excellent choice for clients who need in-depth pro forma financials to finish up their business plans. For this selection, pro forma financials will include:

• 30 Minute Meeting with an MBA Financial Projection Professional.
• Page Count: 19 to 24 pgs.
• 24-month Pro forma profit and loss statements.
• Common size quarterly profit and loss.
• Projected valuation (based on cash flow)
• Payback period
• Financial ratios
• Sensitivity Analysis
• Best Case/Worse Case Analysis
• Funding request (1 page)

Complete Financial Projections Only

Financial Projections Templates Available for Purchase

Downloadable basic p&l and cash budget template.

Want a simple-to-use pro forma profit and loss (P&L) template or a functional cash budget template for your business plan or to use in operations?  Look no further!  My basic profit and loss statement / Cash Budget template allows users to enter information in a data block section.  Once done, the template automatically updates both the profit and loss template as well as the cash budget.

Also, if you need additional help with the pro forma financial model, the pro forma financial model designer will assist in completing the pro forma financial statement template.  Just contact us for pricing!

***Link above will take you to our Payment Website (QualityBusinessConsultant.com).

Basic P&L and Cash Budget Template

Basic 12 Month P&L and Cash Budget Template:     $25.00

Downloadable Pro Forma Financial Projection Template

In this pro forma financial statement template, customers will be able to input their products and sales prices, fixed costs, startup expenses, and other information into the template. Other information may include:

• Products or services for sale.
• Choose a sales price and variable cost. 
• List most startup or expansion costs.
• Determine your monthly fixed costs.
• Include a monthly labor section.

Once this information is entered, my pro forma financial model will update pro forma financial statements for:

• 24-month profit and loss statement.
• Pro Forma income statements for 5 years.
• Pro Forma balance sheet for 5 years. 
• Amortization Schedule for Loan.
• Depreciation Breakdown.

Also, if you need additional help with the pro forma financial model, the pro forma financial model designer will assist in completing the pro forma financial statement template. Just contact us for pricing!

Financial Projection Template

Financial Projection Template:  

Downloadable ADVANCED Pro Forma Financial Projection Template

In the ADVANCED pro forma financial statement template, customers can input their products and sales prices, fixed costs, startup expenses, and other information. Other information may include:

• 36-month profit and loss statement.
• Income statements for 5 years.
• Balance sheet for 5 years. 
• Break-Even Analysis
• Cash Budget
• Financial Ratios
• Best Case/Worse Case Income Statements for 5 years
• Valuation based on cash flows.
• Numerous FREE tutorials to use!
• Click HERE for FREE Financial Projections Tutorials!

Call or Text Paul, Doctoral Candidate, MBA.

321-948-9588

Email: [email protected]

Hours of Operation: 7 Days a week 8 am to 9 pm EST.

Our business plan writers are located in Orlando, Fl. We have researched and written business plans for numerous businesses in the US.

CLICK HERE TO CONTACT US TODAY!!!

"Unlocking Success: Pro forma Financial Projections for Your Business Plan Blueprint"'

A successful business plan requires a meticulous blend of expertise, knowledge, and precision. One crucial component that captures investors' attention is the pro forma financial section, particularly the pro forma financial projections. This is where the prowess of a business plan writer shines. These professionals possess a comprehensive understanding of what investors seek in a business plan and know precisely how to structure and present pro forma financial statements to captivate their interest. By leveraging their expertise, you can unlock the full potential of your business plan, enhancing investor appeal and increasing your chances of securing the funding you need to propel your venture forward.

Leverage the Expertise of Business Plan Writers for Pro forma Financial Statements.

Your business plan's pro forma financial statements section is pivotal when attracting investors. Investors scrutinize pro forma financial statements like income statements to assess the potential return on their investment. Crafting these projections compellingly and persuasively requires a deep understanding of investor expectations and financial analysis. This is where the expertise of business plan writers becomes invaluable. Professional business plan writers comprehensively understand what investors look for in a business plan. They are well-versed in the key factors that attract investors and know how to align your pro forma financial statements, like your income and balance sheets, with those expectations. By leveraging their knowledge and experience, you can enhance the appeal of your business plan to potential investors.

Crafting pro forma statements such as income statements is not a mere exercise in number-crunching. It requires a keen understanding of financial analysis and the ability to forecast the future financial performance of your business. Business plan writers possess the skills to create accurate and realistic projections that demonstrate the potential profitability of your venture. They use sophisticated pro forma financial modeling techniques to consider market trends, industry dynamics, and business assumptions, ensuring your projections are compelling and grounded in reality.

Furthermore, business plan writers know how to present the financial section clearly and logically. They organize the information in a way that is easy to understand, highlighting the key insights and emphasizing your business's strengths. This enhances the readability of your business plan and instills confidence in investors by showcasing your attention to detail and professionalism. In addition to their financial expertise, business plan writers bring a fresh perspective to your business. They can objectively evaluate your business model, identify potential weaknesses or challenges, and offer insights to mitigate them. This objective viewpoint is crucial as it helps ensure that your pro forma financial statements are robust and credible, making a strong investment case.

You free up valuable time and resources by entrusting the task of creating compelling income and other pro forma financial statements to a business plan writer. Instead of spending countless hours struggling with financial analysis, you can focus on other strategic aspects of launching and growing your business. This allows you to concentrate on refining your product or service, developing marketing strategies, or building valuable relationships with potential partners or customers.

Business plan writers offer expertise and knowledge in crafting compelling pro forma financial statements that resonate with investors. Their understanding of investor expectations, financial analysis techniques, and presentation skills can significantly enhance the appeal of your business plan. By leveraging their expertise, you can unlock the potential to attract investors, secure the necessary funding, and propel your business toward success.

Time-Saving Solution: The Power of a Business Plan Writer for Pro Forma Financial Projections

Creating accurate and compelling pro forma financial statements is critical to a comprehensive business plan. However, the process can be daunting and time-consuming, especially for entrepreneurs not well-versed in financial analysis. Fortunately, a time-saving solution exists: hiring a business plan writer.

Business plan writers specialize in translating your business vision into a comprehensive and investor-friendly plan, including pro forma financial statements such as your income statement, balance sheet, or cash flow statement. They have the expertise and experience to navigate the intricacies of financial analysis, ensuring that your forecasts are accurate, realistic, and aligned with investor expectations.

By entrusting the task to a business plan writer, you free up valuable time to focus on other aspects of your business. Instead of dedicating hours to learning pro forma financial modeling techniques and poring over spreadsheets, you can allocate your time and energy to refining your product or service, developing marketing strategies, or building relationships with potential partners and customers. This streamlined division of labor allows you to use your resources and maximize productivity efficiently. Moreover, a business plan writer improves the pro forma statements process. They are well-versed in financial analysis methodologies and have the tools and knowledge to expedite the creation of pro forma financial statements. They can swiftly gather and analyze relevant data, make accurate calculations, and present the information clearly and concisely. This saves you time and ensures that your pro forma financial statements are of high quality and meet the standards expected by investors.

Additionally, a business plan writer can provide valuable insights and recommendations based on their expertise related to pro forma statements. They can help you identify potential pitfalls, assess the viability of your pro forma financial assumptions, and offer suggestions to strengthen your forecasts. Their objective perspective and deep understanding of investor requirements can significantly enhance the overall quality of your business plan.

Harnessing the power of a business plan writer is a time-saving solution when it comes to creating pro forma financial statements. By leveraging their expertise in pro forma financial statements, you can save valuable time, benefit from their efficiency, and receive professional guidance to ensure the accuracy and appeal of your pro forma financial statements. This time-saving advantage allows you to focus on other essential aspects of your business, ultimately increasing your chances of success in achieving your entrepreneurial goals.

Gaining Clarity: Objective Perspective of an External Business Plan Writer

When developing a business plan, it's easy to become immersed in the details and lose sight of potential weaknesses or challenges. That's where the objective perspective of an external business plan writer becomes invaluable. These professionals bring a fresh set of eyes and a neutral viewpoint to evaluate your business, uncovering hidden pitfalls and identifying areas of improvement you may have overlooked. An external business plan writer offers an unbiased and objective analysis of your business model, market strategy, and pro forma financial statements. They comprehensively understand what investors look for in a business plan and can assess your plan from the same perspective. By taking an impartial stance, they can identify potential weaknesses or challenges you may be too close to see.

These writers have extensive experience working with diverse businesses across different industries. This broad exposure allows them to recognize common pitfalls and industry-specific challenges you may not know. Their objective viewpoint helps to bring clarity to your business plan, enabling you to address vulnerabilities and refine your strategies. Additionally, an external business plan writer can offer valuable insights and recommendations based on their expertise. They can provide alternative perspectives, suggest innovative solutions, and propose adjustments to enhance the viability and effectiveness of your business plan. Their objective viewpoint ensures your plan is realistic, well-rounded, and poised for success.

By engaging an external business plan writer, you gain the advantage of their objective perspective, which helps uncover potential weaknesses and challenges. This proactive approach enables you to address these issues before presenting your plan to investors, increasing your chances of securing funding and minimizing risks.

The objective perspective of an external business plan writer is a valuable asset in developing a comprehensive and robust business plan. Their ability to identify potential weaknesses and challenges you may overlook helps you gain clarity and make informed decisions. By leveraging their expertise, you can strengthen your business plan, mitigate risks, and enhance your chances of success in achieving your entrepreneurial goals.

Elevating Trust: The Enhanced Credibility of Your Business Plan

In the realm of business plans, credibility is key. Investors seek confidence in a venture's viability and potential success before committing their resources. One crucial aspect that significantly influences credibility is the presentation of information within the business plan. This is where professional business plan writers excel, as they possess the expertise to present information in a clear, logical, and persuasive manner, ultimately enhancing the credibility of your business plan. Professional business plan writers deeply understand how to structure and communicate information effectively. They know how to highlight the key aspects of your business, showcase its strengths, and address potential concerns concisely and compellingly. Through their expertise in language, formatting, and visual elements, they transform complex data into a coherent and reader-friendly document.

By utilizing their skills in a professional presentation, business plan writers elevate the credibility of your business plan. They ensure that the information flows logically, making it easy for readers, including potential investors, to grasp the essence of your business. Their proficiency in organizing sections, creating impactful headings, and utilizing appropriate charts and graphs enhances your plan's overall readability and professionalism. Moreover, business plan writers bring an outsider's perspective to your business. They can objectively assess your information and identify areas where clarity and emphasis are needed. Their ability to distill complex concepts and technical details into clear and concise language improves readers' understanding and perception of your business.

Another crucial aspect that professional business plan writers consider is aligning your plan with investor expectations. They are well-versed in understanding the specific needs and requirements of investors, enabling them to tailor the presentation of your plan to meet those expectations. By addressing investors' key concerns and showcasing the potential for profitability and growth, they enhance the credibility and appeal of your business plan. The enhanced credibility resulting from a professional presentation can positively impact your business in multiple ways. It instills trust and confidence in potential investors, increasing the likelihood of securing funding. It also impresses stakeholders, partners, and lenders, strengthening your position in negotiations and strategic partnerships. Additionally, a well-presented business plan demonstrates your attention to detail, professionalism, and commitment to success, fostering positive perceptions among all stakeholders.

The enhanced credibility of your business plan through professional presentation is crucial in securing the trust and confidence of investors and stakeholders. By leveraging the expertise of business plan writers, you can ensure that your plan is clear, logical, and compelling, captivating readers and leaving a lasting impression. This elevation of trust opens doors to opportunities, funding, and strategic partnerships, setting the stage for realizing your entrepreneurial vision.

Unleashing Potential: Harnessing Pro Forma Financial Modeling

Forecasting the potential profitability of your business in your pro forma statements is a crucial aspect of business planning. Accurate pro forma financial statements provide insights into your venture's financial health and growth prospects, making them invaluable for investors and strategic decision-making. Business plan writers possess the expertise to create sophisticated pro forma financial models that unlock the potential of your business, enabling accurate and insightful profitability forecasts.

Business plan writers are well-versed in the art of financial modeling. They possess the skills and knowledge to develop comprehensive and accurate pro forma financial statements tailored to your business. By leveraging their expertise, they can accurately forecast revenue, expenses, and cash flow, considering various factors such as market dynamics, industry trends, and your unique business circumstances.

Pro forma financial modeling by business plan writers goes beyond simple calculations. They employ advanced techniques and methodologies to analyze and project financial performance. These models incorporate key assumptions, growth rates, seasonality, market trends, and industry benchmarks to create a comprehensive and realistic view of your business's financial future.

By harnessing accurate pro forma financial modeling, business plan writers provide you with profitability forecasts that empower strategic decision-making. These pro forma statements allow you to assess the financial feasibility of your business strategies, evaluate different scenarios, and make informed choices regarding pricing, investments, and resource allocation. The insights gained from financial modeling enable you to optimize your operations, minimize risks, and seize growth opportunities.

Furthermore, accurate pro forma financial modeling is essential for attracting investors. Investors carefully evaluate the pro forma financial statements in a business plan to assess the potential return on their investment. Business plan writers use their expertise to create compelling and realistic pro forma financial forecasts aligning with investor expectations. By demonstrating a deep understanding of your business's revenue drivers, cost structures, and profitability potential, these forecasts instill confidence in investors and increase the attractiveness of your business for funding.

Accurate financial modeling focused on pro forma statements also serves as a benchmark for tracking and monitoring your business's financial performance. By comparing the projected figures to the actual results, you can gain insights into your strategies' effectiveness, identify improvement areas, and make data-driven adjustments to optimize your business operations.

Utilizing the accurate financial modeling capabilities of business plan writers unlocks the potential of your business. Their expertise in developing sophisticated pro forma financial statements empowers you to make informed decisions, evaluate profitability scenarios, and optimize your operations. Additionally, these projections enhance the credibility of your business plan and increase its attractiveness to potential investors. By leveraging accurate financial modeling, you pave the way for unlocking the full potential of your business and charting a path toward sustainable growth and profitability.

Strategic Focus: Delegate Pro forma Financial Projections

When running a business, focusing on core operations is crucial for success. However, creating pro forma financial statements like the balance sheet can be a time-consuming and complex task that may distract you from your primary responsibilities. By delegating the task to a business plan writer, you can strategically allocate your time and energy toward essential aspects of your business while ensuring that your pro forma financial statements are in expert hands.

A business plan writer specializes in crafting accurate and compelling pro forma financial statements. They have the expertise and knowledge to analyze financial data, interpret market trends, and develop projections aligning with your business goals and investor expectations. By entrusting this critical task to a professional, you can have peace of mind knowing that your financial statement is being handled meticulously.

You can focus on your core operations by delegating the responsibility of pro forma financial statements to a business plan writer. This allows you to refine your product or service, improve operational efficiency, nurture customer relationships, and develop marketing strategies. By emphasizing these essential aspects, you can optimize your business's performance and position it for growth and success.

Moreover, by entrusting your pro forma financial statements to a business plan writer, you benefit from their expertise and industry knowledge. They stay up-to-date with market trends, regulatory changes, and financial analysis methodologies, ensuring that your projections accurately reflect the current business landscape. Their experience working with diverse businesses across various industries enables them to bring valuable insights and strategic recommendations.

Delegating pro forma financial statements to a business plan writer also brings an objective perspective to your business. As an external party, they can assess your business from a neutral standpoint and identify potential areas for improvement or risk mitigation. Their objective viewpoint can help you refine your business strategies and make informed decisions based on a comprehensive analysis of financial data from the created pro forma statements.

By delegating pro forma financial statements to a business plan writer, you strategically focus on core operations while ensuring the accuracy and quality of your balance sheet and other pro forma financial projections. This allows you to efficiently allocate your time and resources, concentrate on driving your business's growth, and optimize your operational performance. With an expert handling your pro forma statements, you can have confidence in the accuracy and credibility of your business plan, paving the way for success and achieving your entrepreneurial goals.

Streamlined Fundraising: Accelerate Investor Confidence with Pro Forma Financials

When securing funding for your business, presenting well-crafted pro forma financials can be a game-changer. Investors are keenly interested in their investments' financial viability and potential returns based on solid pro forma statements. By leveraging the power of well-prepared pro forma financials, you can accelerate investor confidence and significantly streamline fundraising.

Well-drafted pro forma financials are a testament to your business's potential and demonstrate your meticulous approach to financial planning. With their expertise in financial analysis, business plan writers can create accurate and compelling pro forma financial statements that showcase your venture's revenue streams, cost structures, and growth potential. These projections give investors a clear understanding of how your business will generate profits and deliver a return on their investment.

By presenting a well-crafted balance sheet and other pro forma financials, you instill confidence in investors and demonstrate your commitment to financial transparency. The accuracy and professionalism of your pro forma financial statements enhance the credibility of your business plan, making a compelling investment case. Investors are more likely to be convinced of your business's viability when they see a well-structured pro forma financial model that aligns with industry standards and best practices.

Efficient fundraising is a direct result of well-crafted pro forma financials. Investors appreciate the clarity and insight provided by accurate pro forma financial statements. Your pro forma financials not only highlight the growth potential of your business but also enable investors to assess the risks associated with their investment. When your pro forma financials are well-prepared and aligned with investor expectations, it streamlines the due diligence process, reduces the need for extensive questioning, and accelerates the decision-making timeline.

Moreover, well-crafted pro forma financials are a foundation for productive discussions with potential capital investment investors. By presenting comprehensive pro forma financial statements, you can engage in meaningful conversations about your business's growth trajectory, profitability, and financial strategy. This creates a favorable negotiation environment, allowing you to focus on key terms and value propositions rather than spending excessive time explaining and justifying your financial assumptions.

Efficient fundraising is not only about speed but also about optimizing resources and efforts. Well-prepared pro forma financials enable you to attract investors who align with your business objectives and financial expectations. By presenting accurate and compelling pro forma financial statements, you can effectively filter out investors who may not be the right fit, saving both parties valuable time and resources.

Leveraging well-crafted pro forma financials can significantly accelerate investor confidence and streamline fundraising. Accurate and professional pro forma financial statements enhance the credibility of your business plan, showcasing your commitment to financial transparency and meticulous planning. By presenting comprehensive financials, you facilitate productive discussions with potential investors and attract those who align with your business goals. Ultimately, efficient fundraising allows you to focus your efforts on building strategic partnerships and driving the growth and success of your business.

Customized Precision: Tailoring Plans and Pro Forma Financial Statements

Every business is unique, with its challenges, goals, and industry dynamics. When crafting a business plan and developing pro forma financial statements, a one-size-fits-all approach won't suffice. Professional business plan writers excel in this, especially with pro forma statements. They possess the expertise to tailor the business plan and pro forma financial statements to suit the specific needs of your business, industry, and target audience, ensuring a customized and precise approach.

Professional writers understand that a successful business plan goes beyond generic templates and content. They take the time to deeply understand your business, its value proposition, and its competitive landscape. With this knowledge, they can align the business plan and pro forma financial statements with your unique needs, reflecting your vision, goals, and strategies.

Tailoring the business plan and pro forma financial statements to your industry is another crucial aspect. Professional writers stay up-to-date with industry trends, regulations, and market dynamics. They incorporate industry-specific insights, benchmarks, and growth projections to create a plan that resonates with your industry's expectations. Doing so enhances the credibility and relevance of your business plan, increasing its impact on potential investors or stakeholders.

Additionally, a tailored approach takes into account your target audience. Business plan writers understand that different audiences have distinct priorities, expectations, and areas of interest. Whether you are seeking funding from venture capitalists, presenting to a board of directors, or pitching to potential partners, professional writers can adapt your business plan's language, tone, and emphasis to communicate with your specific audience effectively. This customized precision helps capture their attention, engage them in the plan's pro forma financial statements details, and compel them to take the desired action.

Moreover, by tailoring pro forma financial statements showing your capital investment needs and unique needs, professional writers can help you present a realistic and compelling vision of your financial future. They work closely with you to understand your revenue streams, cost structures, and growth strategies. With this understanding, they create pro forma statements that reflect the specific dynamics of your business, allowing you to showcase its potential profitability, return on investment, and long-term sustainability.

By embracing a tailored approach, you gain a competitive advantage. Your business plan and pro forma financial statements become a powerful tool that aligns with your goals, speaks directly to your audience, and differentiates you from competitors. This precision and customization instill confidence in investors, stakeholders, and potential partners, positioning your business for success.

Professional business plan writers offer customized precision when crafting business plans and pro forma financial statements. Their expertise allows them to tailor the plan to your unique needs, industry dynamics, and target audience. By embracing a tailored approach, you can effectively communicate your business's value proposition, capture the attention of stakeholders, and present a realistic and compelling vision of your financial future. With customized precision, your business plan becomes a strategic asset that sets you apart, enabling you to confidently navigate the competitive landscape and drive toward achieving your business objectives.

Precise Perfection: Minimizing Errors in Financial Calculations

Precision regarding financial calculations in your business plan and cash flow statement is paramount. Even a small error can have significant implications and undermine the credibility of your plan. Fortunately, business plan writers bring their expertise to the table, helping to minimize errors and ensuring your plan's overall quality and accuracy.

With their deep understanding of financial analysis and pro forma statements, especially with your pro forma statements, business plan writers possess the skills to meticulously review and validate the numbers in your plan. They have a keen eye for detail and are well-versed in financial formulas, ratios, and modeling techniques. By leveraging their expertise, they can identify and rectify any errors or inconsistencies in your financial calculations, ensuring the accuracy and integrity of your plan. Minimizing errors in financial pro forma statements improves your plan's accuracy and enhances its overall quality. A polished and error-free plan demonstrates your attention to detail and professionalism. It instills confidence in investors, lenders, and stakeholders, as they can rely on the accuracy of the financial information presented. This attention to precision underscores the credibility of your business plan, making it more compelling and persuasive.

Business plan writers also play a vital role in validating the assumptions and inputs used in your pro forma financial statements. They bring a critical eye to the data, challenging and verifying the accuracy and reasonability of the numbers. This process helps ensure that your pro forma financial statements are grounded in reality and based on sound assumptions, enhancing the reliability and trustworthiness of your plan. Business plan writers can offer insights and recommendations to improve the pro forma statements in your plan. Their expertise allows them to identify potential areas for improvement, such as adjusting assumptions, incorporating industry benchmarks, or refining revenue and cost projections. These refinements enhance the accuracy and precision of your plan, providing a more realistic and compelling representation of your business's financial outlook.

By minimizing errors in pro forma statements like your balance sheet, business plan writers contribute to the overall success of your plan. Their attention to detail and commitment to accuracy give you confidence in the numbers presented, empowering you to make informed decisions and present a robust financial case to potential investors or lenders.

Precise perfection is achieved when business plan writers minimize errors in pro forma statements, resulting in an accurate and polished business plan. Their expertise in financial analysis and pro forma statements ensures the integrity and accuracy of your plan, enhancing its overall quality. By presenting a polished plan, you convey professionalism, instill confidence in stakeholders, and create a solid foundation for decision-making and strategic discussions. With minimized errors, your business plan becomes a reliable and persuasive tool that positions your business for success.

Relieve and Thrive: Stress Reduction through Business Plan Writers

Creating a business plan can be a demanding and stressful task, particularly when it comes to pro forma statements. The intricacies of financial analysis and projections can quickly become overwhelming for entrepreneurs. However, by hiring a professional business plan writer to handle the financial aspect, you can experience significant stress reduction, allowing you to focus on other strategic aspects of launching and growing your business.

Professional business plan writers bring their expertise and experience to the table, relieving you of the burden of creating complex financial projections for your pro forma statements. They are well-versed in financial analysis methodologies, industry standards, and investor expectations. By entrusting this critical task to a professional, you can have peace of mind knowing that your pro forma financial statements are in capable hands.

The stress reduction that comes from hiring a business plan writer is invaluable. Instead of spending countless hours grappling with pro forma statements in your income statement and researching industry benchmarks, you can redirect your time and energy toward other strategic areas of your business. This allows you to concentrate on refining your product or service, developing marketing strategies, establishing key partnerships, or nurturing customer relationships. Moreover, professional business plan writers bring fresh and objective perspectives to your business. They can assess your business model, value proposition, and financial assumptions with a critical eye. Identifying potential gaps, weaknesses, or opportunities help you refine and strengthen your business plan. This objective feedback not only enhances the quality of your plan but also reduces the stress associated with uncertainty or overlooking crucial elements.

By relieving the stress associated with the pro forma statements of your business plan, you create space for strategic thinking and decision-making. You can focus on developing innovative strategies, exploring new market opportunities, or refining your business model. This enhanced strategic focus allows you to make informed decisions and seize growth opportunities, ultimately empowering the strategic growth of your business.

Hiring a professional business plan writer to handle the pro forma statements of your business plan provides stress reduction and empowers strategic growth. By entrusting the task to a skilled professional, you can alleviate the stress associated with financial analysis and pro forma statements, freeing up your time and energy for strategic activities. The objective viewpoint of the business plan writer also enhances the quality of your plan and reduces uncertainty. With reduced stress, you can thrive in focusing on other strategic aspects of launching and growing your business, setting the stage for success.

• Get started
• Project management
• CRM and Sales
• Work management
• Product development life cycle
• Comparisons
• Construction management
• monday.com updates

Ultimate pro forma template for Excel

We’re living in some pretty uncertain times.

Over the past couple of years, supply chains have been totally redrawn, and businesses have been forced to evolve how and where they do business. In some cases, that’s created tremendous new opportunities organizations can leverage to chalk up some growth.

But to seize those opportunities, it’s essential to constantly look ahead. That’s where pro forma templates come in handy.

Pro forma projections are all about looking ahead to try and predict where finances are headed and how hypothetical scenarios could affect the bottom line. Fortunately, there are Excel templates that can help you achieve that — or even smarter solutions (more on this later).

This article will explain what a pro forma template is, share our custom pro forma template for Excel, and how monday.com can be used to boost sales forecasting abilities.

Get the template

What is a pro forma statement template for Excel?

When doing the books for a business, one of the most powerful tools is the “pro forma” statement. Pro forma — sometimes written as “proforma” — is a fancy Latin way to say “for form.” But how does that super ancient phrase in a dying (dead?) language relate to businesses in the 21st century?

In accounting, pro forma statements are a way to test out various business situations that might happen in the future. Looking at how those scenarios could play out makes it easier to prepare if they happen in real life.

A pro forma template helps teams understand what data is needed to model different scenarios based on pre-built questions. It’s as easy as “fill in the blanks,” … but this can still be pretty labor-intensive. There are plenty of pro forma statement templates in tools like Excel, Google Sheets, or even a Work OS like monday.com.

Download Excel template

Why use pro forma statement templates?

Pro forma financial statements look a lot like regular financial statements . The critical difference is that pro forma statements are based on “what-if” scenarios, not actual financial results .

Example: What may happen if a business receives a $150,000 loan? Run a pro forma! Produce a statement to look at how that debt would impact cash flow over a certain period.

Pro forma statements demonstrate to investors and lenders that a company is worth investing in. In addition, it’s easier to prove sustainability by presenting well-researched pro forma statements to a would-be stakeholder.

Likewise, pro forma statements make it easier to anticipate changes that could affect the business — for example, if the tax liability went up due to entering a higher tax rate.

That’s why pro forma statements are important. But why are pro forma templates important?

Simply put: they save a whole lot of time. Unless there is a full-time team of accounts with a lot of time on their hands, developing all of these pro forma templates can be time-consuming. It’s also challenging to know where to start.

A pro forma template means the job is already halfway done. The scenarios are already plotted out in spreadsheet form. All that’s left is to fill in the blanks to make the template unique to the situation.

What are some examples of pro forma statements?

There are 3 significant types of pro forma statements: pro forma income statements, pro forma balance sheets, and pro forma cash flow statements.

1. Pro forma income statements

An income statement is one of the most critical financial statements in every accountant’s toolbox . It’s often referred to as a profit and loss (P&L) statement, and it summarizes all net income, net sales, and expenses over a given period.

( Image Source )

A pro forma income statement starts like an ordinary income statement based on actual financials. But let’s say it’s important to see the impact of a 30% rise in costs (like energy price, rent, or property price). A pro forma means it’s possible to run this hypothetical scenario by inflating all of the items in the expense columns by 30%.

The resulting calculations would show how a rise would impact the company’s net profit.

2. Pro forma balance sheets

A balance sheet is a financial statement showing how much a company is worth according to its “book value.” It does this by listing out all of a company’s assets, liabilities, and owner’s equity for a given date. This date is referred to as a “reporting date.”

Like a pro forma income statement, a pro forma balance sheet would be created by building a balance sheet for a given date based on projected values. For example, create a pro forma balance sheet for 12 months in the future and populate the fields with projected asset values, liabilities, and equity in a year.

3. Pro forma cash statements

It’s used to show the company’s ability to operate in the long term and short term based on existing cash inflows.

A pro forma cash statement makes it easy to see how operating activities would be affected if your cash flows were to increase (or dry up).

Want to create a pro forma template in Excel? The process is straightforward. Start with one of Excel’s pre-built templates and enter all hypothetical numbers.

The trouble with this method is that it’s super manual — which is where monday.com’s Pro Forma Template comes to the rescue.

The monday.com pro forma template for Excel

The monday.com pro forma template is all about helping shake the habit of reactive financial management. With the help of our easy-to-create automations and custom rules, proactively setting up all sorts of hypothetical scenarios will run all day, every day.

Simply import financials and then use the dashboard on the Pro Forma Template to choose various custom scenarios.

This template allows for the following:

• Create pro forma income statements, pro forma balance sheets, and pro forma cash flow statements.
• Easily edit each model; easily change the data to make new predictions. Then, make pro forma adjustments based on new information.
• Generate financial ratios.
• Compare multiple pro forma statements and hypothetical ratios side-by-side to help find opportunities, reduce risk, and increase profits.

Want a more interactive experience than using an Excel spreadsheet , something you can easily update in real-time across multiple team members? Consider using the template for monday.com. Then, benefit from all the other supercharged features a Work OS (operating system) brings. 

Get access to advanced real-time analytics into the cost, project, and task management processes, custom reports, and detailed real-time charts to help the team and other stakeholders visualize budget and project progress.

With permission controls, external stakeholders only can view the template, letting the accounting team change any numbers to avoid accidents.

Related templates

Budget tracking template.

The Budget Tracking Template is another way to get a clear picture of the organization’s spending and forecast how those expenses will impact the bottom line.

Like the Expense Tracking Template, the Budget Tracking Template is fully customizable — add action items, reorder based on priority, and create a tailored plan.

CRM Template

monday.com’s CRM Template isn’t just about pro forma financial projections. It’s an all-in-one solution that helps effectively capture leads, look at future sales and financial ratios, and manage contacts.

It can also easily forecast revenue, generate sales insights, and help determine where to focus finances and goals. Create projections around operating expenses and net sales, effectively manage resources, assign tasks to team members, and communicate with multiple teams in real-time.

FAQs about the pro forma statements

Q: how is a proforma in excel created.

A: Excel comes built-in with several pro forma templates to simply fill in the blanks to streamline the pro forma modeling process.

Creating a pro forma statement in Excel from scratch is pretty straightforward. First, make a typical financial statement, such as a cash flow statement. Then, choose one column to amend with hypothetical figures to match various scenarios.

Q: What is a pro forma Excel sheet?

A: A pro forma Excel sheet is a hypothetical financial statement created in Microsoft Excel. These sheets are essentially ordinary financial statements populated with actual and hypothetical financial figures.

Use these sheets to predict how certain events will impact the business.

Q: Does Google Sheets have a pro forma template?

A: There are several built-in financial statement templates on Google Sheets. Although these statements aren’t labeled “pro forma,” they can be utilized as standard financial statement templates on Google Sheets and then populated with projected figures to run various scenarios.

Several third-party sites offer links to pre-built pro forma templates they’ve designed.

Q: Does Excel have financial templates?

A: Yes. Excel has a range of financial templates, including income statements, cash flow statements, and balance sheets.

Q: Why are pro forma statements important?

A: Pro forma statements help you show investors and lenders how the business would fare in specific financial scenarios.

They also help make better-informed business decisions and prepare for worst-case scenarios by understanding how certain variables impact the company’s operations.

Q: What are the 3 benefits of creating a pro forma?

A: Creating a pro forma leads to 3 key benefits:

• Better understand how various scenarios would impact the business.
• Plan for adverse scenarios so they don’t disrupt operations.
• Attract investors and lenders by demonstrating how sustainable the business model is.

Send this article to someone who’d like it.

How to Develop a Pro Forma Model in Excel

Introduction.

A pro forma model is a document used to forecast a company’s financial performance in advance. Pro forma models can help businesses plan operations, predict outcomes, and evaluate risks. They are based on projected future performance, using historical trends and accurate assumptions regarding changes in the future. Developing a pro forma model in Microsoft Excel provides businesses with a powerful tool to analyze their financial performance.

When developing a pro forma model in Excel, there are many benefits. Excel offers the ability to interact with complex models and calculate the financial outcomes of various investments. In addition, Excel allows users to quickly test different assumptions in the financial model and to make adjustments as needed. Moreover, Excel is relatively easy to use, even with basic knowledge of the software.

Setting Up Excel

An essential part of preparing any financial model is setting up the spreadsheet correctly. This includes proper formatting, naming conventions for columns, and the setting up of base formulas. Knowing how to set up your spreadsheet correctly will not only help you create a more polished looking document, but it can also help you save time and eliminate common errors.

Creating the Base

When creating a pro forma model in Excel, it is important to start with a strong base. This includes setting up headers, columns, and cell formatting. Begin by setting up headings for each of the columns and rows to ensure that the information can be easily read and understood later. Once the columns and rows are established, you can begin formatting the cells. Formatting includes such things as:

• Increasing text size for better visibility
• Selecting appropriate color schemes
• Adding border lines around relevant columns and rows
• Creating in-cell drop-down menus for easy data input

Formatting the Cells for Clear and Accurate Information

After you have set up the initial grid of rows and columns, it is important to properly format the cells. Make sure that you set up formulas and data validation in cells to logical outcomes. For example, if you are entering dates in a specific column, you can use data validation to ensure that only valid dates are allowed and to generate an error message if incorrect dates are entered. It is also important to make sure that there are no blank cells in the model, as these can cause problems with formula calculations later on.

Once you have established your base and formatted the cells, you are ready to add in the necessary data to create your pro forma. Having a proper spreadsheet layout will make it easier for you to plug in the data, resulting in a more coherent and professional-looking model.

Gathering Information

Creating a pro forma model is a big undertaking, and the main key to getting the most accurate results is to ensure you’re working with the most up to date information. Gathering all of your relevant information will be the launching pad of your pro forma model.

What Factors Need to be Included

When creating a pro forma model, you will need to include information on a variety of financial concepts. These include but are not limited to historical financial statements, projected income statements, balance sheets, and cash flow statements. In addition, other factors such as outputs from statistical models, assumptions, fixed expenses and variable costs.

Sources for the Information

When gathering the information that will be used to create your pro forma model, it’s important to have reliable sources. This may include clients, competitors, industry reports, online resources, internal and external audits, as well as accounting and financial statements. Other possible sources could be statistical software and pages from regulatory websites.

• Competitors
• Industry reports
• Online Resources
• Internal and external audits
• Accounting and financial statements
• Statistical software
• Regulatory websites

Before compiling this information into your pro forma model, make sure you are gathering information from reputable sources.

Inputting Data

For any pro forma model to be effective, user inputs must accurately reflect the current and predicted data that the pro forma model is intended to evaluate. When creating a pro forma model in Excel, there are two main methods for inputting data: working with formulas and creating visual representations.

Working with Formulas

When working with formulas in Excel to create a pro forma model, it is important to understand and use the Excel functions available. Formulas are used to perform calculations and modify data entries in the worksheet. Excel contains a variety of functions that can be used to create a pro forma model. Some of these functions include SUM, AVERAGE, COUNTIF, and IF. Additionally, manipulating data can be done with formulas such as CONCATENATE and VLOOKUP.

Creating Visual Representations

Along with using formulas, creating visual representations such as progress graphs and charts can also help provide a clear understanding of the data. Excel offers several tools for creating charts and graphs, including Bar charts, Column charts, and Pie charts. These charts and graphs can be used to illustrate changes in financial data over time as well as correlations between different financial measures. Additionally, creating visuals can also help to quickly interpret the data and allow for easy comparison of different analyses.

Perform Financial Analysis

Performing financial analysis is an important step in creating a pro forma model in Excel, as it allows you to foresee potential problems and to forecast the financial health of your business. There are several important components to financial analysis that should be taken into account when developing a pro forma model.

Analyzing Risk, Uncertainty and Valuations

Risk, uncertainty and valuations are essential elements of financial analysis when creating a pro forma model in Excel. Risk analysis involves measuring the level of risk associated with different decisions and scenarios, while uncertainty analysis quantifies the degree to which future events are unpredictable. Valuations are also an important part of analysis and refer to the estimated worth of an asset or company. To properly perform a financial analysis, all three of these components must be taken into consideration.

Creating Statements

In addition to analyzing risk, uncertainty and valuations, creating financial statements is also an important step in the financial analysis of a pro forma model. Financial statements include the income statement, the balance sheet, and the cash flow statement, which provide insights into the financial health of the business. By creating financial statements, you can identify areas of potential problems and make predictions that can be used to make informed decisions.

Financial analysis is an important step when creating a pro forma model in Excel and requires consideration of risk, uncertainty and valuations, as well as creating financial statements. Taking the time to analyze the financial data of your business can help you make more informed decisions and create a model that will be useful in forecasting potential future outcomes.

Sensitivity Analysis

In pro forma modeling, sensitivity analysis is a process that identifies a range of reasonable outcomes and scenarios, providing context to the individual model scenarios. Ultimately, this section is used by managers and stakeholders to assess the performance of a business under different assumptions and economic conditions.

Assessing Performance under Different Economic Conditions

Based on a pro forma’s assumptions, users have the ability to model different scenarios which are used to evaluate the performance of a business under varying economic conditions. These model scenarios could be used to test the assumptions and gain better insight into how the business performs under different economic conditions.

Modifying Assumptions to See Outcomes

Sensitivity analysis also allows for users to modify assumptions, helping them to understand how the business responds to changes such as price, cost, and volume. Additionally, different model scenarios can be used to evaluate the impact of other variables such as inflation, taxation, and the cost of capital on the business performance.

Using sensitivity analysis can help to provide users with a better understanding of the impacts of different economic conditions on the business and help them make more informed decisions. It is an important step in the modeling process and should be taken into account when making business decisions.

Making pro forma financial models with Excel is a valuable skill that is essential for any business, large or small. Sitting down and designing your own pro forma model can help you gain a much better understanding of the inner workings of your business and provide a useful tool for forecasting potential outcomes and responsibilities. Building a model does take time and patience, as it involves significant data entry, research and assumptions that affect the final scenario.

From setting up the model and organizing your data, to inputting calculations and creating your financial statements, there are multiple steps that you have to navigate to create the most realistic picture of your business's finances. Prebuilt templates, tutorials and strategy advice give you the best chance to make the most helpful and effective model possible.

Restating the Purpose of Pro Forma Models

Pro forma models should be used to help guide a company's decisions, enabling calculations to be made and objectives to be tested. A well-built and considered model can help you identify the items that should or shouldn’t be included in your business plan and ensure that you give appropriate consideration to the long-term commitments and goals of your venture.

Encouraging Testing and Refinement

The assumptions that you make don't need to be set in stone. The power of pro forma models comes from using them and testing out multiple scenarios, so it's important to make sure that you're adjusting as needed and taking in feedback from management, advisors and the wider team.

By following the steps covered in this article, you can build a model that offers a realistic scenario for your business. A lot of it is about trial and error, so make sure that you are taking the time to edit, adjust and refine your model whenever you need to.

Related Articles

What to look out for when using a three-way financial model, generating financial reports for your startup, leveraging technology to improve your startup’s financial model, establishing financial goals for your startup, optimizing profitability with your startup’s financial model, understanding the regulations and guidelines for the three-way financial model, a guide to auditing a three-way financial model, how to implement the three-way financial model in a business, how to leverage the three-way financial model for competitive advantage, what are the components of a three-way financial model, leave a comment.

Your email address will not be published. Required fields are marked *

Please note, comments must be approved before they are published

• Search Search Please fill out this field.
• Corporate Finance

Pro-Forma Earnings: What They are, How They Work

Investopedia / Dennis Madamba

What Are Pro-Forma Earnings?

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. Pro-forma earnings are not in compliance with standard GAAP methods and are usually higher than those that comply with GAAP. 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").

Understanding Pro-Forma Earnings

Pro-forma earnings in the first sense are sometimes reported by publicly traded companies that want to present a more positive picture of their financial condition to investors. Pro-forma earnings may be either higher or lower than GAAP earnings , but typically they are higher.

Pro-forma earnings may exclude items that don't normally occur as part of normal operations, such as restructuring costs, asset impairments , and obsolete inventories. By excluding these items, the company hopes to present a clearer picture of its normal profitability.

However, some companies have been known to abuse this practice by repeatedly excluding items that should normally be included. Investors should, therefore, exercise caution when using pro-forma earnings figures in their fundamental analysis . Unlike GAAP earnings, pro-forma earnings do not comply with standardized rules or regulations. As a result, earnings that are positive in a pro-forma scenario can become negative once GAAP requirements are applied.

Following GAAP guidelines, a company may, for example, report a net loss for a quarter. But if that loss came as a result of one-time litigation expenses or restructuring, the company may prepare pro-forma statements that show a profit.

U.S. Securities and Exchange Commission. " Cautionary Advice Regarding the Use of 'Pro Forma' Financial Information in Earnings Releases ." Accessed Nov. 16, 2020.

• Terms of Service
• Editorial Policy
• Privacy Policy
• Your Privacy Choices

• Bookkeeping
• Accounts Receivable
• Accounts Payable
• Catch-Up Bookkeeping
• Financial Reporting
• Fractional Controllership
• Local Bookkeeping
• Industry Bookkeeping
• [email protected]

Pro Forma Financial Statements (with Templates and Examples)

• 26th Nov, 2023

According to Merriam-Webster, "pro forma" means:

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").

When it comes to accounting, pro forma statements are financial reports for your business based on hypothetical scenarios. They're a way for you to test out situations you think may happen in the future to help you make business decisions.

There are three major pro forma statements:

• Pro forma income statements
• Pro forma balance sheets
• Pro forma cash flow statements

Pro forma statements look like regular statements, except they're based on what ifs, not real financial results. As in, "What if my business got a $50,000 loan next year?" Your pro forma statements for that scenario would show what your income, account balances, and cash flow would look like with a $50,000 loan.

Since pro forma statements deal with potential outcomes, they're not considered GAAP compliant . This is because GAAP compliant reports must be based on historical information.

Pro forma statements don't need to meet the strictest accounting standards , but must be clearly marked as "pro forma" and can't be used for things like filing taxes. Using pro forma statements that aren't marked as such to misrepresent your business to investors, the IRS, or financial institutions can be penalized by the Securities and Exchange Commission).

However, pro forma statements are still extremely useful. They can help you make a business plan, create a financial forecast, and even get funding from potential investors or lenders.

Different but related: you can send clients pro forma invoices to let them know how much their order would be if they placed it today.

Why create pro forma statements?

Creating pro forma statements for future scenarios can help you:

• Get financed, by showing lenders or investors how you would use their money to sustainably grow your business.
• Plan for the future, by considering best, worst, and most likely case scenarios in detail.
• Anticipate changes that may affect your business as it grows, such as entering a new tax bracket.

For these purposes, pro forma statements are typically created as a part of a financial forecast in financial accounting. Big corporations who have in-house accountants use pro forma statements for financial modeling and forecasting different scenarios.

Pro forma statements vs. budgets

It may be tempting to think of a pro forma statement as the same as a business budget . After all, you create both in anticipation of the future. And both help you plan how you'll use your money. But budgets and pro forma statements are two distinct financial tools.

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. According to your pro forma annual income statement, your financial projections show it will be $44,000 next year. So, when you create next year's budget, you can include that extra $7,000—maybe spending $4,000 over the course of the year to pay down the principal on a loan , while adding $3,000 to savings.

Types of pro forma statement

There are four main types of pro forma statements. While they all fall into the same categories—income statement, balance sheet, and cash flow statement—they differ based on the purpose of the financial forecast.

1. Full-year pro forma projection

This type of pro forma projection takes into account all of your financials for the fiscal year up until the present time, then adds projected outcomes for the remainder of the year. That can help you show investors or partners what business finances could look like by the end of the fiscal year.

2. Financing or investment pro forma projection

You may be courting investors or trying to convince your business partners of the value of a capital investment or additional financing. In that case, you can use a financing pro forma projection to make your case. It takes into account an injection of cash from an outside source—plus any interest payments you may need to make—and shows how it will affect your business's financial position.

3. Historical with acquisition pro forma projection

This type of pro forma projection looks at the past financial statements of your business, plus the past financial statements of a business you want to buy . Then it merges them to show what your financials would have looked like if you made a business combination (or merger) earlier. You can use this scenario as a model of what may happen in the future if you buy the other business and restructure now.

4. Risk analysis pro forma projection

Looking at both best case and worst case scenarios helps you make financial decisions based on challenges you may face in the future. For instance, what happens if your main vendor raises their prices like they did last year? Or how will that proposed transaction of buying new equipment impact you long term? Risk analysis lets you take the future for a test ride, and try out different outcomes.

How to create pro forma statements

The sample pro forma statements below may look different from the statements you create, depending on what your template looks like. But generally, these are the steps you need to take to create them—and the info your pro forma statements should include.

Creating a pro forma income statement

There are five steps to creating a pro forma income statement:

• Set a goal for sales in the period you're looking at. Let's say you want to increase your income by $18,000 over the course of one year.
• Set a production schedule that will let you reach your goal, and map it out over the time period you're covering. In this case, you'll want to earn an additional $1,500 income every month, for 12 months.
• Plan how you'll match your production schedule. You could do this by growing your number of sales a fixed amount every month, or gradually increasing the amount of sales you make per month. It's up to you—trust your experience as a business owner.
• It's time for the "loss" part of " Profit and Loss ." Calculate the cost of goods sold for each month in your projection. Then, deduct it from your sales. Deduct any other operating expenses you have, as well.
• Prepare your pro forma income statement using data you've compiled in the prior four steps.

One note: your pro forma statements will be much more accurate if your bookkeeping is up to date. That way, when you project future periods, you're basing it off the reality of your business today.

How Accracy can help

To predict the future, you first need to understand the past. With Accracy, you get a crystal clear image of your financial history so you can focus on planning your future. We're America's largest bookkeeping service helping thousands of business owners better understand the financial health of their operations so they can keep focused on growth and planning. When it comes time to create a pro forma statement, you have reliable numbers and reports to get started. We may not be a crystal ball, but we're the next best thing. Learn more .

Example pro forma income statement:

Rosalia's Reliable Recordings

Creating a pro forma cash flow statement

You create a pro forma cash flow statement much the same way you'd create a normal cash flow statement. That means taking info from the income statement, then using the cash flow statement format to plot out where your money is going, and what you'll have on hand at any one time. This pro forma statement can be part of a larger cash flow forecast used for decision making.

Your projected cash flow can give you a few different insights. If it's negative, it means you won't have enough cash on-hand to run your business, according to your current trajectory. You'll have to make plans to borrow money and pay it off.

On the other hand, if net cash flow is positive, you can plan on having enough extra cash on hand to pay off loans, or save for a big investment.

Example pro forma cash flow statement

Mickie's Murakami Museum

Creating a pro forma balance sheet

By drawing on info from the income statement and the cash flow statement, you can create pro forma balance sheets. However, you'll also need previous balance sheets to make this useful—so you can see how your business got from "Balance A" to "Balance B."

The balance sheet will project changes in your business accounts over time. So you can plan where to move money, when.

Example pro forma balance sheet

Daily Dumpling Deliveries

Once you've created your pro forma income statements, and cast your eyes forward to the future of your business, you can start planning how you'll spend your money. It's time to create a small business budget .

New Customer Offer

We are offering free 1 Month Basic Bookkeeping to all new customers so you can experience Accracy's seemless and professional services.

* No Debit/Credit Card Required

Need help with bookkeeping.

• Operations 166
• Tax Tips 192
• Bookkeeping 56
• Starting a Business 53
• Accounting 133

Recent Post

How to Reduce Shipping Costs

Do you send physical products to customers? Learn how to reduce shipping costs, and increase your business's profit margin.

What is an S Corp Election? A Guide for Small Businesses

The S corp election is a request filed with the IRS to change your business's tax status. Here's what that really means and why you should consider it.

Top 8 Easy-to-Use SMB Accounting Software

Whether you're self employed or run a small-midsize business, these following inexpensive accounting programs will help get your finances in order.

Ready to grow your business?

Free Pro Forma Template - Excel and Google Sheets

Complete the form to get your copy of this free resource!

Excel Pro Forma Template: Generate financial projections for your startup's first year. Forecast revenue, expenses, and employee costs while automatically generating an income statement, balance sheet, and cash flow pro forma

Join 15,000+ founders and consultants who have used our free resources and tools

Free 1 Year Pro Forma Template

Download our complimentary 12-month Pro Forma statement template for free. This powerful tool enables you to:

• Forecast startup costs
• Project your first 12 months of product or service revenue
• Predict operating expenses
• Add salary forecasts for your employees

Once you input your assumptions, you'll get:

• 12-month Pro Forma Income Statement
• 12-month Cash Flow Forecast
• 12-month Balance Sheet Projection
• Basic graphs and charts

This versatile financial model is industry-agnostic. If you need an industry-specific Pro Forma template, check out ProjectionHub's premium options.

See examples of the input and outputs of the pro forma spreadsheet below.

Pro Forma Input Examples

You can find examples of input tabs for startup costs, fixed assets, revenue, operating expenses, and salaries below.

Example of Startup Cost Forecast

The financial model input assumptions tab will include general assumptions and startup costs like your fixed assets like buildings, equipment, leasehold improvements and vehicles.  On the input assumptions tab you will also be able to include startup cost assumptions like initial inventory. 

12 Month Revenue Forecast Example

Our revenue assumptions tab will allow you to forecast your number of customers, the products or services they purchase, the purchase price and the percentage of total units sold represented by each product. You can see a quick example of our revenue model below:

Startup Operating Expense Example

You can enter in your operating expense projections for your startup in the table below.  It will allow you to add expenses as a fixed monthly expense or a percentage of revenue. 

Startup Salary Forecasting Example

The last input tab is our salary forecast assumptions.  You can set a salary, employer taxes, benefits, the month the employee starts and ends, and the number of the particular employee.  

Pro Forma Template Output Examples

Our complimentary financial model spreadsheet generates 12 months of income statement, cash flow, and balance sheet projections. Below, you'll find examples of these outputs along with some of the basic charts and graphs included in the template

Example of a 12 Month Pro Forma P&L

Below you will see an example of our income statement pro forma output. 

Cash Flow Forecast 12 Month Example

Next is a 12-month example of our cash flow forecast, illustrating cash from operating activities, financing, and investing activities.

Balance Sheet Forecast Example for 12 Months

The balance sheet forecast output will display 12 months of forecasted assets and liabilities, as shown below:

Pro Forma Graphs

Lastly, our free template includes a profit and loss overview, a monthly sales forecast, and a graph showcasing monthly sales, gross profit, and net income.

If you require a template tailored to your industry with 5 years of projections, we offer 100+ different industry-specific templates to choose from, including:

Restaurant, Trucking, SaaS, Airbnb, Brewery, Dentist, etc.

Check out our Highly Rated Financial Projection Templates

How to Make a Pro-forma Income Statement

More than just a financial exercise, it can become your roadmap for how to approach hypothetical scenarios.

Key Takeaways

• Pro forma income statement allows startups to create a hypothetical projection of your income and expenses.
• The foundation of a pro forma income statement focuses on various assumptions to make accurate quarterly or annual projections of revenue and expenses.
• In creating pro forma income statements, it is advisable to create a revenue model that helps you model out different scenarios with different assumptions. Always sense check assumptions and overall outcomes to make sure your numbers make sense.
• Pro forma income statement is an effective way to get ready for unforeseeable business hurdles, increased taxes, growth plans, and acquisitions.
• A pro forma income statement is an effective way to gain the attention of potential investors, convince them on your growth plans and seek funding.

Introduction

Today, pro forma financial statements have become essential tools for startup founders. It is an effective way to plan ahead of time and predict, control, and analyze risks associated related to business funds.

Contrary to misguided perception, pro forma financial statements are not reserved for big corporations. In fact, small startups can use pro forma financial statements to understand their current financial value and make calculated future predictions.

Without further ado, let’s take a look at what is a pro forma income statement and how you can get one made for your startup.

What is a pro forma income statement?

As a startup founder, you need to think of a pro forma income statement as a hypothetical report on specific scenarios.

Pro forma statements essentially revolve around the “ what if ” formula for founders of a startup. Whether you “might” lose an account or make an acquisition, pro forma financial statements allow a glimpse into the future.

Ultimately, it involves financial projections and assumptions that allow you to make calculated and logical business decisions. For decades, the proforma income statement has been a useful tool for startup founders, investors, and key decision-makers to examine the future financial health of the business.

Pro forma income statement, however, gains a different meaning under the scope of public companies. In any case, whether you want to purchase new equipment, undertake a new debt, or acquire another establishment, you will need to draft a pro forma income statement to determine the cause-and-effect of the decision.

In comparison, conventional financial statements paint the financial situation of the past, whereas a pro forma financial statement, including an income statement, showcases the future financial health of the startup.

Why do you need a pro forma income statement?

You can use a pro forma income statement to review the projected operational business costs against the current fiscal budget. You can use this benchmark data to figure out whether or not you will expect high expenses in the first quarter as opposed to the second quarter of the year.

You can also use the benchmark data of the pro forma income statement to find out whether or not you will have above-average sales growth in a given year. Similarly, you can use the data to review and decide whether or not you should spend more on your marketing campaigns in the fall months.

When fundraising, pro forma statements are useful in giving investors a sense of your revenue growth potential.

Key considerations for a startup

Often, founders are surprised how much pro forma income statement can be advantageous to their startup operations in the foreseeable future. At its core, you have to think of a pro forma income statement as a strategic planning tool to move forward in the right direction.

Pro-forma Income Statement Considerations

When it comes to the pro-forma income statement, there are several uses, benefits, and subjective considerations you need to know.

Potential Investors Will Likely Ask For This

One of the main reasons to make a pro forma income statement is to capture the attention of potential investors.  You can draw the attention of potential investors by announcing your future earnings.

It is an effective way to secure funding and achieve growth in a short time. You can use the same method to secure more funding later on. Pro forma income statement also helps a startup to avail the most suitable financing option from investors.

Ability to Analyze Risks

‍ You can use pro forma income statement projections to establish best and worst case financial scenarios. This helps you realize the range of outcomes your startup can realistically expect in terms of your income.

Positive and ambitious scenarios may paint a rosy picture. On the other hand, you can also get projections that would deplete your startup’s capital and create financial challenges.

Your goal should be to observe and analyze the cost-benefit ratio of each situation and prepare accordingly based on your plan. As you track metrics along the way, you'll be able to course correct and remodel what the future looks like.

For instance, if you want to roll out a new product in the market that would cost you $1 million of equipment and marketing costs, you can add in assumptions on product growth - conservative and ambitious to analyze how the range of outcomes plays on your startups financial health. This will help you figure out the underlying sensitivities (e.g. maybe customer churn is a huge factor that needs preventative measures).

Potential Limitations‍

While a pro forma income statement serves as an insightful way to learn about hypothetical financial scenarios, it is vital to take into account that projections are based on educated “assumptions.”

The key is not to confuse assumptions with facts and projected figures with accurate calculations. In fact, take each pro forma income statement figure with a grain of salt. You have to assume that there is a real possibility that the projected figure may not be accurate.

It is better to be cautious and assess the projected pro forma income statement calculations along with the rest of the financial documents to get more accurate and updated projections.

Changing Rules

The SEC (Securities and Exchange Commission) has the reputation to consistently update and change its strict rules and regulations on pro forma financial statements. However, SEC rules apply specifically to public companies.

Unlike historical financial statements, you should be aware of the fact that there is no regulation in place on the pro forma income statement and balance sheet. However, to entice investors through optimistic projections, make sure not to stray away from standard accounting practices.‍

Steps to make a pro forma income statement for a startup

Technically, a pro forma income statement is not so different from a traditional income statement that includes past performance and financial health of the company. But as mentioned earlier, a pro forma income statement projects the future financial health rather than the past.

The projections serve as windows of opportunities for startup founders to increase the production capacity and drive growth in a startup. You can pay close attention to the possible fluctuations in costs in advance.

Once you understand the purpose, importance, and practicality of making pro forma income statements, you can draft them. When you make a pro forma income statement, make sure you are as detailed as possible throughout the process.

Here’s a quick step-by-step approach to create and calculate various aspects of the pro forma income statement:

Step #1 Create baseline

Your first step to producing a pro forma income statement starts by focusing on the current and previous fiscal years. Create a baseline of your income statement as your current state (if you don't change anything) assumptions.

The idea here is to understand how you grow and your baseline revenue and cost growth rates.

Step #2 Add in your assumptions

Your next step is to determine your assumptions for the next 3-5 years. You will do so by looking at two factors:‍

• Internal factors - Taking your current year (or trailing 12 months) as a baseline, understand current and future drivers of revenue. Do you plan on upping your salesforce? Do you plan on investing in additional marketing channels? How would these drivers impact your revenue? What's the lead time for these factors to show an impact on your revenue? For instance, if you plan to ramp up the sales team, you need to factor in the ramping time before this shows an impact on your revenue.
• External factors - Factor in market, competition, and/or regulatory changes that might impact your product's growth. For instance, GDPR preparedness can impact your timeline on when you would expand to Europe. Alternatively, market reports can help you understand growing trends in customer demand - e.g. the adoption of cloud-based SaaS products over traditional on-premise software can give your company an edge if you play in this field.

It usually helps to build out a revenue model where you can add in your assumptions and sense check numbers to see if they make sense before you plug into your income statement. This way, you can do step #4 (pressure test the numbers and really question your assumptions and your ability to achieve them) before you plug into your financial statements. This will save you time in iterating on your financial statements.

Step #3 Plug into the income statement

As you figure out your growth assumptions, identify the underlying costs and revenue impact it may have on your business. You will need to add both sides into your projected income statement.

Keep in mind the segregation of costs that you'll need to plug in - i.e. cost of sales? salaries of salesforce? marketing expenses? These will have to be rightfully plugged into the right areas.

Here's a good template you can use to format and create your 3-year pro-forma income statement.

Step #4 Pressure test assumptions

The last step is usually the most important. Your assumptions are only as good as your baseline information that feeds them. Make sure your revenue, expenses, and growth numbers make sense and are error-free. If certain initiatives you had planned haven't given you the returns you expected, it's unlikely they will in the future unless something has changed.

Have multiple team members review your model and your assumptions. Creating different scenarios - conservative, likely, and ambitious can help you understand the range of outcomes and help you set targets and plan for stable, sensible progress.

Here's a simpler example of a pro-forma income statement:

Templates & guides

• Understanding the basics of an income statement
• Understanding the importance of proforma statements
• Downloadable Excel templates for proforma statements
• Revenue models for startups

Sign up for our newsletter

Be the first one to know when we publish next

Don't worry, we'll never share your email with anyone else

Read more like this

Do I Need Foreign Qualification?

The 5 Biggest Misconceptions About State Compliance

What is a Payroll Report?

© 2024 AbstractOps

Terms & Conditions

Privacy Policy