Pro Forma is a term used frequently in the context of a company’s financial statement, and refers to the manner in which figures are presented.
In Latin the term “Pro Forma” means “as a matter of form,” and in the case of a financial statement refers to how figures are presented either in present form or as projections.
For publicly traded corporations, statements prepared with the pro forma method are generally made ready ahead of a planned transaction such as an acquisition, merger, or some change in corporate structure based on new investment or capital changes.
The pro forma models are designed to forecast the anticipated result of the transaction(s), with emphasis placed on how the change is expected to impact net revenues, cash flow, taxes, expenses, and so on.
What is a Prospectus?
What are Consolidated Financial Statements?