PROFORMA Meaning and
Definition
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Proforma is an adjective that describes something as being done or developed as a formality or for the sake of appearance. It refers to a standard method or process that is followed to give the impression of conformity, regardless of its actual impact or effectiveness.
In the business and financial context, a proforma statement or report is a financial statement that is based on projected or estimated figures. It is prepared as a preliminary or informative document, showcasing potential financial outcomes based on certain assumptions or hypothetical scenarios. Proforma statements are often used for financial analysis, investment decisions, or business planning purposes. They may include proforma income statements, balance sheets, or cash flow statements, which project future revenues, expenses, assets, and liabilities. These statements offer a glimpse into what a company's financials could look like under different circumstances, enabling stakeholders to assess the potential risks and benefits.
In the realm of sales or commerce, a proforma invoice is a preliminary invoice issued by a seller before a transaction is finalized. It lists the goods or services being provided, along with their respective prices, quantities, and payment terms. It serves as a formal quotation or estimate, outlining the costs that the buyer can expect to incur if they proceed with the purchase. A proforma invoice is often used in international trade or when dealing with new or potential customers to facilitate discussions and negotiations.
Common Misspellings for PROFORMA
Etymology of PROFORMA
The word "proforma" is derived from Latin roots. The prefix "pro-" means "for" or "in favor of", while "forma" means "form" or "shape".
