MGT 300 - Week 4 - Pro Forma

Apr 17th, 2015
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University of Phoenix
Course: Business and Management
Price: $15 USD

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Pro Forma: A beneficial business toolDennis Chaney, Julie Coleck, Ranaldo Daggs, & Viviana RuckerUniversity of PhoenixMGT/300January 30, 2012Pro Forma: A beneficial business toolA business cannot survive without a financial backbone. Capital, human resources, and performance affect a business's financial outcome. Thus, it is important to create different scenarios involving each of these factors for a better understanding. Pro forma is the most effective way to determine the outcomes of various scenarios. Also, Pro forma offers many beneficial views of a business to those financially invested. Not only can an entrepreneur determine where the financial strengths lie, but also what areas of the business need financial improvement. Pro forma is a useful financial tool for any business.Pro FormaTo continue any further, it is important to understand what pro forma is exactly. According to "Pro Forma Statements" (2007), "Pro forma, a Latin term meaning 'as a matter of form,' is applied to the process of presenting financial projections for a specific time period in a standardized format," (p. 885). In other words, pro forma creates a financial visual throughout different periods for those financially invested. As "Pro Forma Statements" (2007) goes on to state, "Businesses use pro forma statements for decision-making in planning and control, and for external reporting to owners, investors, and creditors," (p. 885). Further, pro forma helps those inves

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