• Create BookmarkCreate Bookmark
  • Create Note or TagCreate Note or Tag
  • PrintPrint
Share this Page URL
Help

Chapter 8. Budgeting and Planning Cycle > Creating Pro Forma Financial Statemen...

Creating Pro Forma Financial Statements

The goal of financial planning is to understand and project your financial future. Financial projections are used to evaluate and forecast business plans, to estimate future financing needs, and to establish internal operating budgets. Creating pro forma financial statements is a standard way to forecast a company's financial future. (A pro forma is simply a projection. A pro forma balance sheet, for example, projects assets and liabilities at the end of some future period.)

Pro forma statements build on the financial tools and concepts you've already learned about, such as income statements, balance sheets, and cash flow analysis. There are many approaches to developing pro forma statements, ranging from back-of-the-envelope estimates to extensive computerized models that attempt to predict the future. Regardless of the approach, the goal is the same: to develop realistic and useful financial projections.


PREVIEW

                                                                          

Not a subscriber?

Start A Free Trial


  
  • Creative Edge
  • Create BookmarkCreate Bookmark
  • Create Note or TagCreate Note or Tag
  • PrintPrint