What is proforma?

I pulled this of an internet dictionary

Pro Forma

A Latin term meaning “for the sake of form”. In the investing world, it describes a method of calculating financial results in order to emphasize either current or projected figures.

Investopedia Commentary

Pro forma financial statements could be designed to reflect a proposed change, such as a merger or acquisition, or to emphasize certain figures when a company issues an earnings announcement to the public.

Investors should heed caution when reading a company’s pro forma financial statements, as the figures may not comply with GAAP. In some cases, the pro-forma figures may differ greatly from the those derived from generally accepted accounting principles.



In plain English:

Financial Statements based on “something” that hasn’t happened yet. When reading them, you have to decide how likely that “something” is to happen.

For example, current occupancy rates for an apartment complex are 50%, but market occupancy rates for that area are 90%. A realtor will post pro forma financial statements with figures representing the property at market occupancy rates, instead of the current low occupancy rates to create a more appealing picture of the property and show its upside potential.

Take them for what they’re worth!!!