A pro forma is a Latin term meaning "for the sake of form" or "as a matter of form." In business and finance, it refers to documents or statements prepared based on hypothetical scenarios or assumptions rather than actual historical data

. In finance and accounting, a pro forma usually refers to financial statements that project or estimate a company's future financial performance. These statements are used to show "what-if" scenarios, such as the effects of a planned merger, acquisition, sale, or other major business decisions. They often exclude unusual or nonrecurring transactions to focus on core business performance

. Types of pro forma financial statements include:

• Pro forma income statement: Projects future revenues, expenses, and profits.
• Pro forma balance sheet: Estimates future assets, liabilities, and equity.
• Pro forma cash flow statement: Forecasts cash inflows and outflows under certain assumptions

Pro forma statements are typically unaudited and do not have to follow strict accounting rules like GAAP, allowing companies to adjust or omit certain costs to better reflect expected future conditions. However, they rely on assumptions and estimates and are used primarily as planning tools rather than guarantees of actual results

. **Besides financial statements, the term "pro forma" is also used for documents like pro forma invoices, which are preliminary bills sent to buyers to outline the terms and request payment before goods or services are delivered. These invoices serve as a formal estimate rather than a final accounting document

.** In summary, a pro forma is a formal, hypothetical presentation of financial or transactional data used to inform decision-making, planning, or negotiations by showing projected outcomes or expected scenarios rather than actual past results.