The difference between financial statements and pro forma financial statements

 

respond to the following:

Explain the difference between financial statements and pro forma financial statements. Describe how these statements are developed and used in financial management and planning.

note from professor: According to Advani (2012) financial statements consist of the normal balance sheet, income statement and cash flow statement. To be more detailed financial statements are any of the forms that can be publicly filed such as the 10-K, Annual Report, Proxy Statements, 10-Q, Form 8-K and Form 144. Pro Forma statements in general are just adjusted financial statements that fall into two categories:

Adjusted Earnings
Projections
In essence Pro forma Statements are mostly used for forecasting and planning. I will leave you with this small bit of information so that you can expand on the second part of the question.

Sample Solution

Financial statements are formal documents issued by a business that offer a comprehensive snapshot of their financial performance at any given point in time. The most common types of financial statements include a balance sheet, income statement, cash flow statement, and statement of changes in equity (Investopedia 2020). These statements are typically prepared based on generally accepted accounting principles (GAAP) as well as Internal Revenue Service (IRS) regulations to ensure accuracy and proper reporting procedures.

Pro forma financial statements differ from traditional financial statements as they are created for forecasting or planning purposes. Unlike regular financial reports which present the company’s historical performance, pro forma reports provide an estimate of the firm’s current or future projected performance given certain assumptions such as sales increase and expense decrease over time (Harvard Business Services 2020). Pro forma statements commonly consist of an income statement, balance sheet and cash flow statement but can also include other customized elements depending upon individual companies’ needs such as sensitivity analysis and pricing structures among others.

These specialized reports allow executives to make more informed decisions with regards to operations moving forward while providing investors with useful information on how their investments could potentially be affected should all forecasted assumptions come true(Harvard Business Services2020). For instance , if managers believe launching a new product line will result in increased revenue , they could use pro forma projections prior taking action; this way investment can be based off reliable data instead relying solely on speculation . Similarly , if deciding between two different vendors offering similar services at different prices , utilizing forecasts to compare short-term versus long-term impact could prove beneficial when making final decision .

In summary, both regular and pro forma financial statements allow businesses to monitor their progress towards achieving objectives along ensuring compliance within regulatory framework designed protect stakeholders involved ; however provided forecasts provide valuable insight playing role when researching potential outcomes before committing resources towards projects.

Besides, Vittola contends war is fundamental, not just for guarded purposes, ‘since it is legitimate to oppose force with force,’ yet in addition to battle against the unreasonable, a hostile conflict, countries which are not rebuffed for acting shamefully towards its own kin or have treacherously taken land from the home country (Begby et al (2006b), Page 310&313); to “show its foes a thing or two,” yet for the most part to accomplish the point of war. This approves Aristotle’s contention: ‘there should be battle for harmony (Aristotle (1996), Page 187). Nonetheless, Frowe contends “self-protection” has a majority of portrayals, found in Chapter 1, demonstrating the way that self-preservation can’t necessarily legitimize one’s activities. Much more dangerous, is the situation of self-preservation in war, where two clashing perspectives are laid out: The Collectivists, a totally different hypothesis and the Individualists, the continuation of the homegrown hypothesis of self-protection (Frowe (2011), Page 9& 29-34). All the more significantly, Frowe discredits Vittola’s view on retaliation in light of the fact that right off the bat it engages the punisher’s position, yet in addition the present world forestalls this activity between nations through legitimate bodies like the UN, since we have modernized into a generally tranquil society (Frowe (2011), Page 80-1). In particular, Frowe further disproves Vittola through his case that ‘right goal can’t be blamed so as to take up arms in light of expected wrong,’ proposing we can’t simply hurt another in light of the fact that they have accomplished something uncalled for. Different elements should be thought of, for instance, Proportionality. Thirdly, Vittola contends that war ought to be kept away from (Begby et al (2006b), Page 332) and that we ought to continue conditions strategically. This is upheld by the “final retreat” position in Frowe, where war ought not be allowed except if all actions to look for tact comes up short (Frowe (2011), Page 62). This implies war ought not be announced until one party must choose the option to pronounce battle, to safeguard its domain and freedoms, the point of war. In any case, we can likewise contend that the conflict can never be the final hotel, considering there is consistently a method for attempting to stay away from it, similar to approvals or mollification, showing Vittola’s hypothesis is imperfect. Fourthly, Vittola inquiries upon whose authority can request a formal statement of war, where he infers any region can do battle, yet more critically, “the ruler” where he has “the normal request” as per Augustine, and all authority is given to him. This is additionally upheld by Aristotle’s Politics ((1996), Page 28): ‘a ruler is the regular prevalent of his subjects.’ However, he really does later stress to place all confidence in the sovereign is off-base and has results; an exhaustive assessment of the reason for war is expected alongside th

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