What Is a Pro Forma Income Statement?
A pro forma income statement is very similar to a cash flow forecast in the sense that it shows much of the same information. In the accounting world “pro forma” means to predict, assume or hypothesize. The prices of your goods or services will go up and so will expenses as time passes, therefore, examples of pro forma income statements predict those increases to determine future profits. The agency SCORE, a division of the Small Business Association helps small business owners to plan, fund, and project items like income and expenses. In our Media Gallery, you’ll find an example of a pro forma income statement from SCORE in a Microsoft Excel format that calculates automatically. This pro forma income statement is useful in predicting incomes and it also takes into account the taxes your business may have to pay on that income, depending upon how your entity is structured.
