A pro forma balance sheet is a financial statement that presents the expected financial position of a company in the future. It is based on certain assumptions about the company’s future performance and is often used in conjunction with other financial statements to assess the company’s financial health. A pro forma balance sheet can be useful for investors, creditors, and other stakeholders who want to better understand the company’s financial position. It can be used to make informed decisions about investing in or lending money to the company.
The pro forma balance sheet is a useful tool for financial planning and forecasting. It can be used to identify potential financial risks and opportunities and to develop strategies to mitigate risks and take advantage of opportunities. Creating a pro forma balance sheet is a relatively straightforward process, and there are many resources available to help.
What is Included in a Pro Forma Balance Sheet Template?
A pro forma balance sheet typically includes the following information:
- Assets: This section includes a list of all of the company’s assets, including current assets (such as cash, inventory, and accounts receivable) and non-current assets (such as property, plant, and equipment).
- Liabilities: This section includes a list of all of the company’s liabilities, including current liabilities (such as accounts payable and short-term debt) and long-term liabilities (such as long-term debt and bonds).
- Owners’ Equity: This section includes the value of the owners’ equity in the company. This is calculated by subtracting the company’s liabilities from its assets.
The information on the pro forma income statement is used to project the company’s financial position in the future. The assumptions that are used to create the pro forma balance sheet should be clearly stated so that users can understand the basis for the projections.
How to Create a Pro Forma Balance Sheet Template
The following steps can be used to create a pro forma balance sheet:
- Calculate the company’s current financial position. This can be done by creating a balance sheet for the most recent period.
- Identify the assumptions that will be used to create the pro forma balance sheet. These assumptions should be based on the company’s historical performance and future expectations.
- Use the assumptions to project the company’s future financial position. This can be done by making adjustments to the current balance sheet based on the assumptions.
- Finalize the pro forma balance sheet. This includes reviewing the projections and making any necessary adjustments.
Creating a pro forma balance sheet is a valuable tool that can be used to improve financial planning and forecasting. It can help companies to identify potential financial risks and opportunities and to develop strategies to mitigate risks and take advantage of opportunities.
Pro forma balance sheet templates are available online and in financial software. These templates can be customized to meet the specific needs of a company. It is important to note that a pro forma balance sheet is only a projection of the future and is subject to change. Companies should regularly review and update their pro forma balance sheet to ensure that it is accurate and reflective of the company’s current financial position.
