How to Write a Pro Forma Business Plan Pro Forma Business Plan Template

Remember that creating Pro forma income and financial statements are essentially best guesses. Remember to continually update the projections in your pro forma to ensure ongoing accuracy. 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. It may be tempting to think of a pro forma statement as the same as a business budget. But budgets and pro forma statements are two distinct financial tools.

Those statements are conveying the future business activities and the future financial performance of the company. For example, if you make a sale today, it will be considered revenue in your income statement.

types of pro forma statements

If your company must produce an introductory paragraph with its pro forma documents, it should describe the content of your pro forma documents. This means that it should define the transaction, the entities involved, and the periods of time. In this paragraph, you should offer a high-level explanation of the limitations and assumptions the pro forma documents were produced under. For example, if your company recently acquired or dispensed with another company, the assumptions would be the changes in finance expected. The limitations should discuss the challenges of predicting the financial future of a company. Use the templates found here to create your own cash flow statement forecast.

Create a spreadsheet with a column for each month during the year. In the left hand column on the top half of the page, create fields for each type of revenue you earn, such as retail and wholesale. On the left hand column on the bottom part of the page, list all of your expected expenditures, even if they don’t belong on your income statement, such as loan principal payments. Susan tells Jack she needs him to prepare pro-forma financial statements to determine the profitability of the purchase. She mentions that following GAAP is not required in preparing pro-forma statements.

Types of Pro Forma Financial Statements

Pro Forma’s contain running balances for the assets, liabilities, and equity we wish to have in the future. A pro forma income statement would show how the company’s revenues and expenses might change and ultimately affect company profits. Income statements would show how much it would cost a company to pursue the project and how much revenues might improve after completion. Financial management, to assess your financial position in the current year, and for any future time period.

The first thing we’ll do is divide the https://personal-accounting.org/ loan amount by the length of the repayment period, which gives us the principal we need to pay each year. In the case of the restaurant, we’ll pay back a $75k loan over five years. When the percentage is consistent across multiple periods, there is likely some correlation between sales and receivables. Luckily, cash has already been handled in our example template, so we’ll move on to the next item. Find opportunities for businesses owned by women and people of color.

Types of Pro Forma Statements in Business Plans

When writing a How to Create a Pro Forma Balance Sheet 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. A pro forma balance sheet is a comparison of a business’ assets and liabilities. The pro forma part of the balance sheet is a projection that looks ahead, assuming certain things will occur. Pro forma balance sheets are difficult to compile, but banks generally ask for them and they are important for showing your potential financial picture.

Even though cash is typically the first line item on the balance sheet, we don’t handle it first. Total assets must balance the total liabilities plus owners’ equity. In Bright Lawn’s case, we already know that the total pro forma assets total $483,000. Pro forma total liabilities are determined by adding up current and long-term liabilities.