How Do You Prepare Pro Forma Financial Statements For A Business Plan?
When writing a business plan, properly prepared pro forma financial statements must be included. This financial information provides potential investors a hypothetical snapshot of the future financial health of your business. Investors will not look at a business plan that does not include pro forma financial statements. Follow these steps to create a pro forma financial statement for your business plan. Step 1 Make educated assumptions of future cash flows, fixed and current assets, and liabilities. This can be done by researching standards for the industry in which your business will operate. Step 2 Prepare a Pro Forma Balance Sheet. Include all current and fixed assets, liabilities and shareholders’ equity. To compute shareholders’ equity, subtract total liabilities from total assets. Step 3 Get the Pro Forma Income Statement in order. Include all sales revenues, cost of goods sold, losses, operating expenses, taxes and depreciation of property, plant and equipment, if applicable. S
