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Financial Management: Core Concepts, Third Edition
book

Financial Management: Core Concepts, Third Edition

by Raymond M. Brooks
January 2015
Beginner
480 pages
31h 42m
English
Pearson
Content preview from Financial Management: Core Concepts, Third Edition

12.5 Planning with Pro Forma Financial Statements

Another important aspect of short-term financial planning is forecasting operating cash flow and, ultimately, the company’s profitability in the coming period. This type of financial planning typically uses forecasted income statements, balance sheets, and statements of cash flow. We call these forecasted accounting statements pro forma financial statements, or pro formas for short. A pro forma financial statement—whether a balance sheet, statement of cash flow, income statement, or retained earnings statement—sets out the company’s financial predictions on an “as if” basis; that is, it projects future financial performance based on a set of operating and sales assumptions. There are many ways ...

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Publisher Resources

ISBN: 9780133866698