How To Create A Pro Forma Financial Statement (with Simple Template)

The desire to look into the future for the benefit of taking guided decisions that stimulate profits to the maxim whilst bringing loss to zero is inherent in every business. And as such has only been 100% accomplished in blockbuster movies. Economists and financial gurus have been inspired to develop systems, techniques, and tools to, at least, predict a business’ future to a percentage.

And speaking of potent predictor systems in the financial world, pro forma analysis takes the frontline. Unfortunately, the knowledge of how to create a pro forma financial statement perfectly lies in the hands of a few financial experts who are cashing in hugely with that skill.

Right here, in this article and in just 10 minutes, I’ll take you through the following;

  • What Is Pro Forma Statement
  • Where And When To Use A Pro Forma Statement
  • Types Of Pro Forma Financial Statements
  • How To Create A Pro Forma Financial Statement Without a pro forma calculator

You can also find a startup financial projection template online so you can have an overview of how pro forma analysis is carried out by the top financial advisers and investor gurus.

Let’s get started.

How To Create A Pro Forma Financial Statement

What Is A Pro Forma Statement?

Simply put, a pro forma statement is the result of a pro forma analysis. It is a result that holds valuable financial information that standard financial reports cannot offer. It predicts” the future of a financial activity based on a number of considerable hypothetical conditions. Suppose your business was just about to be acquired by Global Conglomerate, Inc. or that you were about to merge with a rapidly-rising company, a pro forma lets you foresee whether to go for it or not. In the next section, I’ll explain more about the areas where you can apply this powerful financial tool.

Where And When To Use A Pro Forma Statement

Financial Planning And Business Modelling; as a business manager, an accurate pro forma analysis allows you to make a comparison between two or more business proposals or plans, and decide upon the one that best serves your goals, visions, and purpose. You’re able to;

  1. Guage different scenarios against a benchmark
  2. Generate cash flow projection
  3. Identify the driving assumption behind each option
  4. Develop budget and sales projection for each option
  5. Make data collection and analysis in P and L projections
  6. Make comparisons between the resulting pro forma balance sheets

Financial Reporting; whether you own a publicly-traded company or you are interested in being a shareholder of such companies, a pro forma is important. For every publicly-traded company, pro forma statements are a prerequisite and an integral part of the requirements to operate as stated by the AICPA, FASB, and the Security Exchange Commission. On the other side, this statement or report gives a potential investor, shareholder, or creditor an overview of the impact of changes on a company’s financial statement before investing.

Guage The Degree Of The Impact Of Changes; as mentioned in the preceding bulletin, this financial report highlights the impact of changes on a business’s finances. But more specifically, when a pro forma analysis is done accurately, the degree of that impact can be forecasted and this is especially useful to know if the water is not too cold beyond your liking. This is not for investors alone but for business holders equally.

Types Of Pro Forma Statements

Before drilling into the details of how to create a pro forma business statement, in this section I will highlight the 3 basic types of pro forma financial statements.

1. Pro Forma Balance Sheet; this type of pro forma evaluates the projected liability and assets of the company. In some cases, the projected equity of the business and or of the business owner is put into the calculation as well. On the assets side, both the current and the non-current projected assets are considered. Such assets include accounts receivable, cash, and inventories.

On the flip side, the current and non-current liability of the company is also included in the making of a pro forma balance sheet. Though there are various sub-types of pro forma balance sheet, risk analysis is the most common.

2. Pro Forma Income Statement; this type of pro forma pinpoints the total projected income of the business by considering 3 sections. In the first section, the allowances, discounts, returns, and sales revenue of the business sold or in-inventory products and services are put together. Finally, while the second section calculates the projected costs of selling goods and services, the third section tracks the daily expenditure of the business. Historical acquisition projection, report with adjustment to GAAP, and pro forma income statement based on time period; are the 3 types of a pro forma income statement.

3. Pro Forma Cash Flow Statement; finally, this type summarizes the list of the projected or expected outflows and inflows of cash to the business from and to various sources. A typical example of this is an investment projection which summarizes how far the finances of a business can change in relation to a change in investment.

How To Create A Pro Forma Financial Statement In 4 Simple Steps

Finally, regardless of the type that you’re creating, here is the boilerplate template you need to make a potent pro forma analysis without a pro forma calculator and still end up with a near-to-perfection statement.

  • Step 1 (List and calculate); depending on the type of pro forma under consideration, your business revenue projections must be listed and calculated. Seek help from experts to determine an average annual revenue that is realistic other than making unguided assumptions.
  • Step 2 (Estimate assets and liability); the projected assets (current and non-current) and liability (current and non-current) must be estimated carefully.
  • Step 3 (Cashflow estimation); to complete your pro forma statement, issuance of stocks, dividends, sales investments, and other elements of cash flow must be estimated.
  • Step 4 (Create a chart of accounts); on this chart, the yearly pro forma statement of your business is broken down into months or dual-month or quarter-month.


So far, I have drilled into the complete detail of the pro forma financial statement. And I can only hope that you’re able to guide your business decisions by your own uniquely-created pro forma. Use the comment box if you miss something or want a private discussion on the same topic.

Francis Nwokike

Francis Nwokike is a Social Entrepreneur and an experienced Disaster Manager. I love discussing new business trends and marketing tips. I share ideas and tips that will help you grow your business.

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