Pro forma earnings is a non-GAAP financial measure that companies use to report earnings. It is an adjusted net income figure that excludes one-time items, such as restructuring charges or the impact of an acquisition.
The purpose of pro forma earnings is to give investors and analysts a better sense of a company's underlying profitability. By stripping out one-time items, pro forma earnings provide a more accurate picture of a company's true earnings power.
However, pro forma earnings can be abused. For example, a company might exclude a one-time charge in order to artificially boost its earnings. Or a company might make unrealistic assumptions in its pro forma earnings guidance. As a result, pro forma earnings should be viewed with some skepticism.
How do you calculate pro forma retained earnings?
To calculate pro forma retained earnings, you will need to take the beginning retained earnings balance and add or subtract any items that have occurred since the beginning of the period. Items that will affect the retained earnings balance include net income (or loss), dividends, and any other items that would affect the equity on the balance sheet.
What does pro forma Ebitda mean?
Pro forma EBITDA is a measure of a company's earnings that excludes interest, taxes, depreciation, and amortization. This measure is often used to assess a company's financial performance, as it provides a more accurate picture of a company's operating cash flow.
Pro forma EBITDA is not an officially recognized financial measure, but it is commonly used by analysts and investors. Is a pro forma the same as a P&L? A pro forma is a financial statement that is prepared in advance of a specified event. A P&L, or profit and loss statement, is a financial statement that summarizes a company's revenue and expenses for a specific period of time. What does proforma stand for? Proforma is a Latin word that means "in the manner of a form or template." In accounting, proforma refers to a financial statement that is prepared using a standardized template. Proforma financial statements are often used in business planning and forecasting. How do you find pro forma retained earnings? To find pro forma retained earnings, you need to take the current retained earnings and add or subtract any items that would impact it in the future period. For example, if you are projecting retained earnings for the next year, you would need to add or subtract items such as net income or dividends that are expected to occur in that future period.