What does a pro forma statement do? On what inputs does a pro forma st

What does a pro forma statement do? On what inputs does a pro forma statement rely?

What will be an ideal response?

ANSWER

Answer: A pro forma statement sets out the financial predictions of a company on an “as if” basis–that is, it projects future performance based on a set of operating and sales assumptions. There are a variety of ways to produce pro forma statements, but they usually rely on two primary inputs: (1) the prior year’s financial statements and (2) the projected sales for the coming year.