Business Plan Proforma

Business Plan Proforma-28
Numbers in financial statements have to mean what they are supposed to mean.

Numbers in financial statements have to mean what they are supposed to mean.

A pro-forma financial statement can be defined as “a financial statement prepared on the basis of some assumed events and transactions that have not yet occurred.” So a pro-forma income statement is an income statement based on a forecast.

(Some people refer to an income statement as a “P & L” or profit and loss.) When you’ve completed the pro-forma income statement and the cash flow forecast based on it, you can then use that information to produce your first year end balance sheet.

All of the new product developments and the major company changes such as expanding operations are in the business plan.

Behind all of these future actions is the pro forma financial statement.

A good forecast will show the sales of each of your major products and services, together with costs of producing or delivering them.

Subtracting the cost of goods sold from the revenue will show you the gross profit you can generate.You also forecast details of your sales and marketing costs and of your general administrative costs.When you deduct those expenses from your gross profit, you will know your Net Income or EBITDA (Earnings Before Interest, Taxes, Depreciation & Amortization).Banking and securities laws make even some innocent financial errors look like fraud.Preserving the details of financial standards is the only way business numbers can stand up to legal scrutiny.When a company is run properly, nothing happens by chance because it is all planned out in the business plan.Most lenders require a business plan to help fund any start-up, and every smart business updates its business plan each year to keep the company on the right path.This is the projected financial statement for the year that helps the company to make important decisions as each new challenge is met.Pro Forma Revenue If you are creating a pro forma financial statement for a start-up, then you will have to use current industry data and your own business plans to project how much revenue you will make in your first year.They want to make sure that your business makes financial sense and that it will generate both profits and cash to recover their investment.We are professional accountants as well as business plan consultants, so we are experts.

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