Proforma Definition


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Hello all,

I work in an environment where the term "Proforma" is used very frequently. Why is this term being used versus something like "Balance Sheet", "Income Statment", etc.??
 
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Becky

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The term 'proforma' is often used to describe the standard format or layout of a document or form.
 
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Thank you, Becky! Is it appropriate to name a financial document "Proforma" though? Ex. "Transportation Program Proforma" versus "Transportation Program Income Statement" or "Transportation Program Balance Sheet"
 

Becky

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It is common parlance to refer to these blank documents as 'proforma' in the same way that you would say 'template', so as long as the document doesn't contain any actual figures I would say it was acceptable.
 
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I've used the term pro forma when projecting cash flows and financial statements prepared in advance of some planned major project . It's a model that looks at the projected cash flows and helps to decide spending and expense controls. It's useful for short term decision making, like a few months out, but there's a lot of gray area when you start extending your projections out to a year or more.

Mike
 

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