How to Make a Pro Forma
A pro forma is a theoretical financial statement. It depicts financial information for your business in a hypothetical situation, such as if you implement a scenario described in your business plan. Entrepreneurs seeking funding usually prepare pro formas to persuade potential investors that a proposed project will provide financial returns. You can also prepare a pro forma for your own records, in order to evaluate the viability of a business or project.
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Instructions
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Prepare a pro forma balance sheet by calculating your net worth if you implement the project you are proposing. Choose a future date for your pro forma, such as one year from the present. List all the assets you will own according to your hypothetical scenario, including the income you intend to accumulate and the property or equipment you intend to purchase. List all your liabilities as well, including debt that will still be outstanding from the current project and existing debt. Also include financial information about accounts payable, or sums you owe on inventory that you pay over time.
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Create a pro forma income statement detailing your income and expenses during a specified period, according to a theoretical scenario, such as if you introduce a new product. List all your projected expenses, including materials, rent and payroll. Separately list all projected sources of income, such as sales and income from rental property. Subtract your projected expenses from your projected gross income to calculate your projected net income.
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Make a pro forma cash flow projection. Use a spreadsheet with twelve columns and dedicate one column to each month of the coming year. Use the upper half of the left margin to list every source of capital you will have available, such as investments, loans and business income. Use the lower half of the left margin to list each type of expense you will incur, including rent, labor, materials and loan payments. Total your available capital and expenses for each month. Subtract the monthly expenses from the monthly income and include the net capital with your total available funds for the following month.
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References
- Photo Credit The bookkeeper in a warehouse of polygraphic production image by terex from Fotolia.com
