BUSINESSTOWN How To Create & Use Financial Projections

How to Create a Pro Forma Income Statement

Click here What Does Pro Forma Mean? You may be wondering, what does “pro forma” mean? Basically, it is a fancy word for “future” or “projected.” Sometimes, however, it is used to restate financial books in an unofficial way. For example, a company might present a “pro forma” income statement of what its income may... READ MORE

How to Create a Pro Forma Balance Sheet

Click here What is a Pro Forma Balance Sheet? A pro forma balance sheet is similar to a historical balance sheet, but it represents a future projection. Pro forma balance sheets are used to project how the business will be managing its assets in the future. A pro forma balance sheet, along with a pro... READ MORE

How to Create a Pro Forma Cash Flow For Your Business

What Is a Pro Forma Cash Flow? Projected future cash flow, which may also be called “pro forma cash flow,” or simply “cash flow,” is created to predict inflow and outflow of cash to your business. A pro forma cash flow, along with a pro forma income statement and a pro forma balance sheet are the... READ MORE

Create a Break-Even Analysis for Your Business

What is a Break-Even Analysis? A break-even analysis is the sales level that is required for your business to operate without incurring a financial loss. It is important to determine this point, as the viability of your business is reliant on staying above this number. A Sample Break-Even Analysis Let’s take a look at Sam’s... READ MORE

Q&As: Do I Need to Create Pro Formas for My Business?

Q: How often should I create pro formas? A: If your business is growing, you should start from scratch once each year. Additionally, the cash flow pro forma should generally be updated on a monthly basis. The cash flow is the most critical pro forma statement. If you run out of cash, you effectively are... READ MORE

Streetwise Advice: Harness the Power of Pro Formas

Multiple Scenarios Some people suggest that you make several sets of pro formas—most likely, best and worst case scenarios. I recommend that you carefully assemble one set of pro forma forecasts based on the most likely case. Developing pro formas is a tedious process. In creating one set of forecasts, you will probably remain more... READ MORE