PRO FORMA Meaning and
Definition
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Pro forma is an accounting term used to describe a financial statement or report that is prepared based on assumptions, estimates, or projections. It is a Latin phrase meaning "for the sake of form", indicating that the document is prepared for presentation purposes rather than being an exact representation of the actual financial situation.
In the business context, pro forma statements are often used to provide stakeholders, such as investors, creditors, or management, with an overview of the potential financial effects of specific transactions, events, or hypothetical scenarios. They are typically based on historical financial data, but may include adjustments to reflect anticipated changes or include nonrecurring items. Pro forma statements may include pro forma income statements, balance sheets, cash flow statements, or any other financial reports that present the financial information in a standardized format.
Pro forma statements are useful for decision-making, financial planning, and comparing financial information across different periods or companies. They can aid in assessing the impact of potential mergers, acquisitions, or other business transactions, as they provide a forecasted picture of what the financial statements would look like if such events were to take place.
It is important to note that pro forma statements are not audited or finalized financial statements, but rather serve as estimates or approximations.
Common Misspellings for PRO FORMA
- oro forma
- lro forma
- -ro forma
- 0ro forma
- peo forma
- pdo forma
- pfo forma
- pto forma
- p5o forma
- p4o forma
- pri forma
- prk forma
- prl forma
- prp forma
- pr0 forma
- pr9 forma
- pro dorma
- pro corma
- pro vorma
Etymology of PRO FORMA
The word "pro forma" has Latin origins and it translates to "as a matter of form" or "for form's sake". The term comes from the combination of the Latin words "pro", meaning "for" or "as", and "forma", meaning "form" or "shape". In English, "pro forma" is used to describe something that is done or presented as a routine, customary, or standard practice, often for the sake of appearance or compliance with formal requirements.
Similar spelling words for PRO FORMA
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