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How to create & use pro forma statements

Cube Software

Think of pro forma statements as a monetary crystal ball, a guiding financial forecast. The Securities and Exchange Commission (SEC) requires that discrepancies between pro forma and GAAP-compliant financial reports be explained when released to the public. Another, critical use case of pro forma financial statements is risk analysis.

GAAP 40
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What is Quality of Earnings?

CFO Share

Audited financial statements focus on compliance with GAAP accounting standards, whereas Quality of Earnings reports focus on the company’s earnings history and potential. Sales concentrations and/or backlog risk. Analysis of inventory reserves and allowances. Unusual or nonrecurring items of income or expense.