Pro Forma

A A A

DEFINITION

A Latin term meaning "for the sake of form". In the investing world, it describes a method of calculating financial results in order to emphasize either current or projected figures.

INVESTOPEDIA EXPLAINS

Pro forma financial statements could be designed to reflect a proposed change, such as a merger or acquisition, or to emphasize certain figures when a company issues an earnings announcement to the public.

Investors should be careful when reading a company's pro-forma financial statements, as the figures may not comply with generally accepted accounting principles (GAAP). In some cases, the pro-forma figures may differ greatly from the those derived from GAAP.


RELATED TERMS
  1. Goodwill

    An account that can be found in the assets portion of a company's balance sheet. ...
  2. Forward Looking

    A business slang term for predictions about future business conditions. Stockholders ...
  3. Pro-Forma Forecast

    A financial forecast based on pro-forma income statements, balance sheet and/or ...
  4. Earnings

    The amount of profit that a company produces during a specific period, which ...
  5. Annual Report

    1. An annual publication that public corporations must provide to shareholders ...
  6. Generally Accepted Accounting Principles ...

    The common set of accounting principles, standards and procedures that companies ...
  7. Pro-Forma Earnings

    Projected earnings based on a set of assumptions and often used to present a ...
  8. Earnings Per Share - EPS

    The portion of a company's profit allocated to each outstanding share of common ...
  9. Working Capital

    This ratio indicates whether a company has enough short term assets to cover ...
  10. Billing Cycle

    The interval of time during which bills are prepared for goods and services ...
Related Articles
  1. The Importance Of Corporate Transparency
    Investing Basics

    The Importance Of Corporate Transparency

  2. Understanding Pro-Forma Earnings
    Fundamental Analysis

    Understanding Pro-Forma Earnings

  3. What are pro forma earnings?
    Investing

    What are pro forma earnings?

  4. Understanding Leveraged Buyouts
    Fundamental Analysis

    Understanding Leveraged Buyouts

  5. Georges Doriot And The Birth Of Venture ...
    Investing

    Georges Doriot And The Birth Of Venture ...

  6. How The Sarbanes-Oxley Era Affected ...
    Fundamental Analysis

    How The Sarbanes-Oxley Era Affected ...

  7. How Return On Equity Can Help You Find ...
    Economics

    How Return On Equity Can Help You Find ...

  8. Top 4 Most Competitive Financial Careers
    Professionals

    Top 4 Most Competitive Financial Careers

  9. 4 Leverage Ratios Used In Evaluating ...
    Fundamental Analysis

    4 Leverage Ratios Used In Evaluating ...

  10. Operating Profit
    Investing

    Operating Profit

comments powered by Disqus
Hot Definitions
  1. Genuine Progress Indicator - GPI

    A metric used to measure the economic growth of a country. It is often considered as a replacement to the more well known gross domestic product (GDP) economic indicator. The GPI indicator takes everything the GDP uses into account, but also adds other figures that represent the cost of the negative effects related to economic activity (such as the cost of crime, cost of ozone depletion and cost of resource depletion, among others).
  2. Accelerated Share Repurchase - ASR

    A specific method by which corporations can repurchase outstanding shares of their stock. The accelerated share repurchase (ASR) is usually accomplished by the corporation purchasing shares of its stock from an investment bank. The investment bank borrows the shares from clients or share lenders and sells them to the company.
  3. Microeconomic Pricing Model

    A model of the way prices are set within a market for a given good. According to this model, prices are set based on the balance of supply and demand in the market. In general, profit incentives are said to resemble an "invisible hand" that guides competing participants to an equilibrium price. The demand curve in this model is determined by consumers attempting to maximize their utility, given their budget.
  4. Centralized Market

    A financial market structure that consists of having all orders routed to one central exchange with no other competing market. The quoted prices of the various securities listed on the exchange represent the only price that is available to investors seeking to buy or sell the specific asset.
  5. Balanced Investment Strategy

    A portfolio allocation and management method aimed at balancing risk and return. Such portfolios are generally divided equally between equities and fixed-income securities.
  6. Negative Carry

    A situation in which the cost of holding a security exceeds the yield earned. A negative carry situation is typically undesirable because it means the investor is losing money. An investor might, however, achieve a positive after-tax yield on a negative carry trade if the investment comes with tax advantages, as might be the case with a bond whose interest payments were nontaxable.
Trading Center