INTRODUCTION: This page provides information on financial and business topics and other areas of interest to the investors.

FINANCIAL PROJECTION

Pro forma Statements

The most comprehensive look at the likely future performance of a company can be obtained by developing a set of pro forma statements. Pro forma statements are projected financial statements that are a set of assumptions about a company's future performance and funding requirements. The pro forma income statement represents a broad operational plan for the business, while the pro forma balance sheet reflects the anticipated cummulative impact of assumed future decisions on its financial conditions. Both statements are prepared by taking the most readily available estimates of the future activity and projecting, account by account, the assumed results and conditions. This approach is not based on detailed accounting transactions, but instead on a creative use of the financial statement framework as a structure on which to arrange future expectations. In addition, a third statement, a pro forma cash flow statement is prepared to provide further insight into funds movements that is expressed in the forecast period. Cash flow statements arrange into operations, investments, and financing categories will give the most likely movements of the expected changes in the company's funding patterns.

Pro forma projections can be done for any time period with any level of detail. They can be developed to show quarterly or annual patterns. There are no difference in the basic principles for projecting either annual or quarterly periods, only the time intervals. They are invaluable in making estimates for funding. Banks assess client's business credit worthiness from these statements. The key to the development of pro forma statements is the use of formal planning process and selected ratios to establish the company's net cash requirement as of a future date for which the pro forma balance sheet is prepared.

Cash budgets are detailed projections of each specific times cash move in or out of the business.

Operating Budgets

Operating budgets are detailed projections of all the company or department's revenue and or expense patterns, and they are supplementary to both pro forma statements and cash flow statements.

click on SEC to see cautionary advice (2001-144.txt) that companies and advisors should consider when releasing "pro forma" financials informations.