By creating a pro forma, you as the principal will have the ability to analyze future cash flows and their significance. Future cash flows are ultimately determined so the parties involved can measure the value of the project by measuring return on capital. Regardless of the project, we strive to understand the motivation of our clients and the intended use of the pro forma. Ultimately, a well written pro forma will make assumptions that all parties can agree upon.
The Pro Forma.
A pro forma is commonly used to discuss and prepare financial information. With multiple parties involved in one business transaction, i.e. buyers, sellers, investors, and lenders, the pro forma acts as a uniform way to represent all the financial information pertaining to an income producing company.
Pro Forma are frequently used for the following; obtaining debt financing, securing equity partners, and are also used for real estate transactions to express the financial details of a property being bought or sold. More specifically, a project’s pro forma models the company’s cash flow. It does this by summarizing historical cash flows and states current operating figures.
By displaying monthly and annual figures of income, property expenses, cost of capital, and other pertinent operating figures, the pro forma models the business’s revenue and expenses. Based on both historical and current operating data, the pro forma then make projections about future performance. Pro Formas are used for all business types where there is a stream of cash flows generated by the company. In addition, it might also be used by investors or lenders who are evaluating a portfolio of the business or businesses.
By evaluating your needs and taking measure of your audience, we can create a fully tailored pro forma that will convey your position. Regardless of the intended use, we strive to understand your projects so that we can document your cash flow and generate an expected return on capital invested.