proformas

Pro forma is Latin for "for the sake of form" or "as a matter of form." In business usage, the term refers to documents or statements prepared on an estimated or hypothetical basis, intended to illustrate a scenario rather than to report an actual, audited result.

Pro forma financial statements are hypothetical financials that show what results would look like after planned transactions or events, such as a merger, acquisition, new financing, or capital project. They adjust revenue, costs, depreciation, taxes, and other items to reflect the assumed changes. They are used for planning, valuation, and presenting potential outcomes to lenders or investors, but they are not compliant with standard accounting frameworks and should be clearly labeled as pro forma.

Pro forma invoices are preliminary bills issued before goods are shipped. They provide an estimate of price, terms, and shipping costs to facilitate quotes, financing arrangements, and customs documentation. They are not demand for payment and are typically superseded by a commercial invoice after delivery.

In financial reporting, "pro forma" can refer to non-GAAP measures like pro forma earnings or revenue. These figures are disclosed alongside reconciliations to official standards. They aim to improve comparability but can be misleading if the adjustments are unclear or overly favorable.

Limitations include reliance on assumptions and potential for selective presentation. Readers should examine the underlying assumptions and disclosures. Pro forma documents are tools for planning and communication, not substitutes for audited financial statements or binding contracts.