 TAHIR ALI WAGGAN

 ROLL: MPA/2K18/34

 CLASS: MPA FINAL

 PRESENTATION TOPIC: PRO FORMA

STATEMENTS

 PRESENTED TO: MA’AM NOREEN BHUTTO

 DEPT: PUBLIC ADMINISTRATION

 pro forma (Latin for "as a
matter of form" or "for the
sake of form")
 Pro forma financial
statements are financial
reports issued by an entity,
using assumptions or
hypothetical conditions
about events that may
have occurred in the past
or which may occur in the
future. ... Investment pro
forma projection.
 Plan provide important information about:
 future expectations, including
 sales and earnings forecasts,
 cash flows,
 balance sheets,
 proposed capitalization, and
 income statements. ...
 Management's appraisal testing and re-testing the
assumptions management based plans.
 For a small business owner are the analysis, income
statement, cash flow, and invoice statements.

 The Key Types of Pro Forma Statements:

 Costs of goods or services sold;

 Sales revenue;
 Expenses;
 Projected net profit.
 Full year projects the Company’s financial
statements and earnings potential based on
year to date results and few assumptions
presented to the management of the Company
and to the investors and creditors.
 Projection of Company’s performance can be used to
showcase to potential investors in case the Company
is seeking new funds.

 Financial statements based on the funding needs and

type of investors and funding channels used.
 The Company may create pro forma statements
considering an acquisition/merger of another
business.

 The Company will create (F.S) for past 2-3 years

considering the acquisition and looking at its impact.
 This approach is useful to estimate the impact of an
acquisition on the financials of the Company.
 The Company can make assumptions like net costs
of acquiring the business, positives from synergies
and intellectual property gains and estimate the total
impact on the financial statements.

 This method can also be used for a shorter time

period like one-year giving details of Company’s
performance in case an acquisition is made.

 Such pro forma analysis and statements help the

investors and shareholders to better understand the
management strategy in running the business.
 Pro forma statements can be used in risk analysis.

 These statements perform analysis on the financials

of the Company considering the best case and worst-
case scenario so that the financial managers have a
better outlook on how various decisions can impact
the financial health of the Company.

 191.45 is averaged forecast/projection.

 Identify assumptions of financial and operating characteristics
that generate the scenarios.
 Develop the various sales and budget projections.
 Assemble the results in profit and loss projections.
 Translate this data into cash-flow projections.
 Compare the resulting balance sheets.
 Perform ratio analysis to compare projections against each
other and against those of similar companies.
 Review proposed decisions in:
marketing, production, research and development, etc., and
assess their impact on profitability and liquidity.
 A pro forma invoice is
a document that is
issued from the seller,
the exporter, to the
buyer, the importer, to
confirm the buyer's
intentions of
purchasing the order.

 Pro forma invoice is

used for the creation of
sales, whereas invoice
is used for
confirmation of sale.
 Primary Importance:
 Pro forma statements are used to create a
budget and determine the need of the
company for capital. ...
 Growth Opportunities. ...
 Capital Investors. ...
 Troubleshooting. ...
 Adjustable Projections lp review all of them.
 PRO FORMA  GAAP
 If a Company had a one-  However, under GAAP,
time cost it may not it will have to report
report such cost on pro the one time cost and
forma financial statement thus negatively
considering it’s a one impacting the net
time cost and if included income of the
does not show the Company.
operational performance
of the Company.
 Pro forma financial statements are informative to
investors showing various assumptions and projections
for the Company’s financials. However, such statements
could vary substantially from actual events and may be
inaccurate. Using these assumptions are not fraudulent in
any way as pro forma earnings are not regulated.

 The investors should be careful while using pro forma

statements and should rely on the GAAP figures and
financial statements for analyzing the Company’s
performance. The analysts and investors should dig deep
and should try to find the reasons for variance between
the pro forma and GAAP financial statements.