When writing a business plan, properly prepared pro forma financial statements must be included. This financial information provides potential investors a hypothetical snapshot of the future financial health of your business. Investors will not look at a business plan that does not include pro forma financial statements. Follow these steps to create a pro forma financial statement for your business plan.
Instructions
1. Make educated assumptions of future cash flows, fixed and current assets, and liabilities. This can be done by researching standards for the industry in which your business will operate.
2. Prepare a Pro Forma Balance Sheet. Include all current and fixed assets, liabilities and shareholders' equity. To compute shareholders' equity, subtract total liabilities from total assets.
3. Get the Pro Forma Income Statement in order. Include all sales revenues, cost of goods sold, losses, operating expenses, taxes and depreciation of property, plant and equipment, if applicable.
4. Organize the Statement of Cash Flows. In this document, include net income, any sales or purchases of assets (non-current) and any stock issues, repayments of bonds or dividend payouts, if applicable.
5. Create a Pro Forma Financial Statement for monthly periods for the first year; quarterly for the second year; and annually for years three through five.
Tags: forma financial, your business, assets liabilities, business plan, Forma Financial
