Pro Forma Statements

Read this section and pay close attention to the summary of pro- forma financial statements as follows: (1) the Pro-forma income statement, (2) the Pro-forma balance sheet, (3) assessment of Pro-forma statements, (4) the bigger picture, and (5) end of chapter problems. Attempt the practical exercises at the end of this section to check your understanding of the uses of Pro-forma financial statements. Note that the images in this resource are broken.


  1. Using data from CABS, create pro forma income statements. CABS expects sales to increase by 5% (worst case), 10% (most likely) or 15% (best case). Using the percent of sales method (and assuming that only COGS and SG&A costs increase), create new balance sheets for the best, worst and most likely cases.

CABS Pro Forma Income Statement

CABS Income Statement (Thousands of Dollars)

  1. Using the following assumptions, create new pro forma balance sheets for CABS.

    1. The company wants to hold at least $100 in cash.
    2. The firm's long-term debt will decrease to 82.6.
    3. No new common stock will be issued.
    4. Accounts receivable take on average 80 days to collect.
    5. The company would like to hold 25 in inventory.
    6. The tax rate will remain the same.
    7. The note payable will remain the same.
    8. The company typically pays 45 days and accounts payable are projected to be 123.

CABS Pro Forma Balance Sheet

CABS Balance Sheet (Thousands of Dollars)