How do financial executives use pro forma financial statements? How do organizational goals influence the preparation and evaluation of pro forma financial statements? What are some examples of decisions that result from proforma financial statements? When preparing pro forma financial statements, how does data selection eventually relate to legal and ethical considerations?© BrainMass Inc. brainmass.com October 1, 2020, 11:20 pm ad1c9bdddf
How do financial executives use pro forma financial statements?
Pro-forma financial statements can be an effective tool for management because the format will synthesize the thoughts and plans of upper management as well as middle management, department heads and others. In that regard, it is a participatory exercise that can then be used for accountability of managers. Variance analysis later can be very helpful for management to understand what went wrong as well as what went right.
How do organizational goals influence the preparation and evaluation of pro forma financial statements?
First it forces the managers to carefully plan ahead beginning with a sales forecast and ending with expected expenses. Once planned, the pro-forma statement will put all those separate ideas and plans together ...
The 496 word solution gives a good overview of how pro forma financial statements are used in business by first listing the types of information that can be prepared for evaluation, and second, the types of decisions that can be made based on the pro forma information.