Pro forma definition

Pro forma refers to a set of financial statements that incorporate assumptions or hypothetical conditions regarding past or future events. Pro forma statements are useful for presenting possible financial results, but must be viewed with caution if the underlying assumptions are not valid or not likely. They are typically targeted at potential or existing investors in a business.

For example, pro forma statements can be constructed that extend an entity's financial statements through the end of its current fiscal year, containing assumptions regarding the final months of the year that have not yet occurred. Similarly, pro forma statements can include the results of a recent acquisition as though it had occurred earlier, as of the beginning of the year.

Related Courses

Financial Forecasting and Modeling 
Interpretation of Financial Statements