Pro Forma

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DEFINITION of 'Pro Forma'

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.

BREAKING DOWN 'Pro Forma'

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.

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RELATED FAQS
  1. Can pro forma financial statements be more helpful to analysts and investors than ...

    Although there are inherent problems with investors relying on either the pro forma financial statements issued by companies ... Read Full Answer >>
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    The U.S. generally accepted accounting principles (GAAP) require companies to adhere to uniform reporting standards that ... Read Full Answer >>
  3. Which pro forma financial statements should always be included in a business plan?

    When deciding which pro forma financial statements should be included in a business plan, it is important to always include ... Read Full Answer >>
  4. What are pro forma earnings?

    Great question, but it is not easily answered, because pro forma earnings figures are inherently different for different ... Read Full Answer >>
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