ENTREPRENEURSHIP

Detailed explanation-1: -An Income Statement is traditionally used to measure profitability of the business for the past accounting period. However, a “pro forma income statement” measures projected profitability of the business for the upcoming accounting period.

Detailed explanation-2: -Pro Forma Budget Documents A budget anticipates the inflow of projected revenues and the outflow of funds for a defined future period, usually a fiscal year. A budget is based on certain assumptions about future expenses and revenues.

Detailed explanation-3: -A pro forma income statement in business plan is the statement prepared by the business entity to prepare the projections of income and expenses, which they expect to have in the future by following certain assumptions such as competition level in the market, size of the market, and growth rate, etc.

Detailed explanation-4: -Income statement is a company’s financial statement that indicates how the revenue is transformed into the net income during a certain period of time. Pro forma Income statement includes revenue, COGS, operational expenses and non-operational expenses.

Detailed explanation-5: -A pro forma income statement will show how much a business or company expects to make in sales and revenue, it also highlights forecasted fixed or variable operating expenses and ultimately, shows how much profits and retained earnings can be made at the end of a future financial period.