Pro Forma Financial Statements: A Guide for Small Businesses

Pro forma financial statements are a type of financial statement that shows what a company’s financial situation would look like if certain events had occurred or if certain assumptions were made. They can be used to project future financial performance, to compare different scenarios, or to make financial decisions.

Pro forma financial statements are not a replacement for traditional financial statements, but they can be a valuable tool for small businesses. If you are thinking about starting a business or if you are trying to grow your existing business, it is important to understand pro forma financial statements and how they can help you.

What are Pro Forma Financial Statements?

Why Use Pro Forma Financial Statements?

There are a number of reasons why you might use pro forma financial statements. Some of the most common reasons include:

To project future financial performance. Pro forma financial statements can be used to project future financial performance by assuming certain events or assumptions. For example, you might use pro forma financial statements to project what your revenue will be in the next year if you hire 10 new employees.
To compare different scenarios. Pro forma financial statements can be used to compare different scenarios. For example, you might use pro forma financial statements to compare the financial impact of two different marketing campaigns.
To make financial decisions. Pro forma financial statements can be used to make financial decisions. For example, you might use pro forma financial statements to decide whether to take out a loan to expand your business.

How to Create Pro Forma Financial Statements

There are a few different ways to create pro forma financial statements. One way is to use a software program like Microsoft Excel. Another way is to hire a financial consultant to help you.

If you are using a software program, you will need to enter your company’s financial information, such as its income, expenses, and assets. You will also need to enter the assumptions you want to make. The software will then generate pro forma financial statements for you.

If you are hiring a financial consultant, they will help you collect your company’s financial information and enter it into the software. They will also help you make the assumptions you need to make.

What to Include in Pro Forma Financial Statements

There are a few different things you can include in pro forma financial statements. Some of the most common things include:

Income statement. The income statement shows your company’s revenue, expenses, and net income.
Balance sheet. The balance sheet shows your company’s assets, liabilities, and equity.
Cash flow statement. The cash flow statement shows your company’s cash inflows and outflows.

You may also want to include other information in your pro forma financial statements, such as your company’s debt, its financial ratios, and its financial projections.

DeFinance Can Help You Build Your Business Pro Forma

DeFinance is a financial consulting firm that can help you build your business pro forma. We can help you collect your financial information, enter it into the software, and make the assumptions you need to make. We can also help you understand your pro forma financial statements and how they can help you make financial decisions.

Contact DeFinance today to learn more about how we can help you build your business pro forma.