Pro forma template: Free Excel budget templates

Key takeaways

• A pro forma statement is a forward-looking statement that projects a company's future financial performance, excluding one-time costs like acquisitions. 
• Common types include pro forma income statements, pro forma balance sheets, and pro forma cash flow statements.
• These tools help finance teams plan for different business outcomes and make better budgeting and investment decisions.

What are pro forma financial statements?

Pro forma financial statements are used to project a company's future financial performance. The term “pro forma,” which translates to “for the sake of form” or “as a formality,” reflects their role in shaping forward-looking plans rather than reporting past performance.

According to PwC, pro forma financial information is used to illustrate the impact of a transaction or event on a company’s financial position as if it had occurred at an earlier date. In practice, this allows finance teams to evaluate how changes like new funding, acquisitions, or pricing shifts could affect future results before those decisions are finalized.

Unlike traditional financial statements, which follow generally accepted accounting principles (GAAP) and report historical performance, pro forma statements allow teams to adjust for nonrecurring or unusual items. That flexibility makes them useful for planning and forecasting.

You can create pro forma versions of all the standard financial reports:

• Income statement
• Balance sheet
• Cash flow statement

These models give finance teams a clearer picture of potential risks, returns, and cash needs.

Download a free pro forma template here.

When do we use pro forma statements?

Pro forma statements are helpful during periods of rapid growth or change. Companies can use them to assess the impact of a proposed merger or acquisition, a new product launch, expansion into new markets, or other future changes. 

They also play a key role in decisions like:

• Large capital expenditures
• Real estate transactions or leases
• Budget planning and cash flow forecasting
• Financial ratio analysis
• Profit and loss projections

These models give finance teams a clearer picture of potential risks, returns, and cash needs.

Financial statements vs. pro forma statements 

As defined by PwC, “Financial statements are written records that illustrate the business activities and the financial performance of a company.” They include records like income statements, balance sheets, and cash flow statements that reflect a company’s actual performance based on accepted accounting standards.

Pro forma statements, on the other hand, explore what could happen. They focus on the impact of hypothetical situations like funding rounds, new investments, or operational shifts. 

Because pro forma statements don’t have to follow GAAP, they can be more flexible. But that flexibility comes with a caveat: it’s important to scrutinize the assumptions behind them, as they can sometimes present a more optimistic view than reality supports.

How to create a pro forma template

Creating a pro forma template involves a few key steps to ensure it accurately reflects your business's potential financial future. 

Download a free pro forma template for Excel

Here’s how to build one:

1. Determine your base financials

Let's start with the basics. Determining your base numbers means gathering the figures from your most recent financial statements. Think income, expenses, assets, liabilities, and equity. These numbers are your starting point and will heavily influence your projections. These baseline figures serve as the foundation for your projections—so precision matters.

2. Identify major changes ahead

What’s coming up that could affect your financials? This could be anything from a merger or acquisition to launching a new product or expanding into new markets. These changes can shake things up, so it's important to spot them early. 

Knowing what's coming allows you to adjust your projections and prepare for any financial twists they might bring.

3. Calculate the financial impact

Once you’ve outlined your potential changes, start estimating how they’ll affect revenue, costs, and profitability. Will a new hire raise payroll expenses? Could a product launch open up a new revenue stream? Use financial modeling to test different assumptions and assess viability. This step is where you figure out if your plans are financially sound and worth pursuing.

4. Model different scenarios

No single forecast will cover everything. That’s why pro forma modeling works best when you build multiple scenarios and have each one test how your financials respond under different assumptions. 

Most finance teams start with three core scenarios:

• Best-case: Assume favorable conditions, such as faster revenue growth, strong customer demand, or delayed hiring costs. This scenario helps quantify upside potential and understand what’s possible if execution and market conditions exceed expectations.

• Base-case: This reflects the most realistic outcome based on current trends, historical performance, and confirmed plans. This version typically becomes the working forecast and serves as the benchmark for tracking performance over time.

• Worst-case: Model downside risk, such as slower sales cycles, higher expenses, or unexpected cash constraints. This scenario helps teams identify breakpoints, assess liquidity risk, and plan mitigation strategies before problems surface.

Scenario planning is like having a map for the unknown. It helps you anticipate challenges and opportunities, so you're ready for whatever comes your way. 

Model different scenarios with a free pro forma template.

Examples of pro forma statement formats

While pro forma statements often follow the same structure as standard financial reports, each format serves a distinct purpose. Depending on whether you’re evaluating profitability, balance sheet impact, or cash runway, the outputs can vary significantly.

The most common types are:

Pro forma income statement

The pro forma income statement shows a company’s expected revenue and expenses. It helps companies understand how different variables, like pricing changes, new hires, or marketing campaigns, could affect profitability.

For example, if a business is considering a new marketing campaign, it’ll want to know how it'll affect its bottom line. They could create a pro forma income statement that excludes the costs of the campaign. This allows the finance team to isolate potential profit increases and determine if the spend is justified.

To isolate the financial impact of a decision, a pro forma income statement typically focuses on a few core components, like:

• Revenue assumptions: Forecasted sales based on expected growth rates, pricing changes, or new product launches. These assumptions reflect how demand is expected to change under the scenario being modeled.
• Cost of goods sold (COGS) and gross profit: Estimated direct costs tied to revenue, which roll up into gross profit. This shows whether projected revenue planning improves margins or simply increases costs.
• Operating expenses: Projected ongoing costs such as salaries, rent, software, and marketing. In pro forma models, these line items are often adjusted to reflect planned hires, campaigns, or cost controls tied to the scenario.
• Operating income: Profit generated from core operations after operating expenses are applied. This helps teams assess whether the underlying business remains profitable under the new assumptions.
• Net income: The final profit estimate after accounting for taxes, interest, and other non-operating items. This figure helps evaluate whether the decision improves overall financial performance.

Start your pro forma income statement with a free template download.

Pro forma balance sheet

A pro forma balance sheet is a financial statement showing a company’s expected assets, liabilities, and equity after a significant event, such as an acquisition or a new financing round.

An excellent example of using a pro forma balance sheet is if your company considers taking on new debt. You can see how the new debt will impact your company's financial position and make an informed decision about whether to proceed with the loan. After all, interest payments on debt can significantly impact a company’s bottom line. 

Pro forma balance sheets are also helpful for showing the financial impact of proposed changes to your business, such as opening a new location or closing a current location. 

You can evaluate how a major decision affects your financial position by focusing on three projected components in your sheet:

• Assets: Expected resources the business will control in the future. These typically include current assets such as cash, accounts receivable, and inventory, as well as long-term assets like property, equipment, or leasehold improvements added as part of the modeled scenario.
• Liabilities: Future obligations the company expects to owe. Current liabilities may include accounts payable or short-term debt, while long-term liabilities reflect commitments like loans, bonds, or financing tied to acquisitions or expansion plans.
• Equity: The residual value left after liabilities are subtracted from assets. This includes retained earnings, new capital contributions, or changes driven by projected net income, helping teams understand how a decision impacts ownership value over time.

Start your pro forma balance sheet with a free template download.

Pro forma cash flow statement

A pro forma cash flow statement shows a company's expected cash inflows and outflows at a specific time in the future. They can be short-term (for daily operations), medium-term (for financial projections), or long-term (for investments or strategic decisions).

You might use a pro forma statement if you want to predict how new products will impact your company's cash flow or if you’re considering switching to a subscription-based business model. Of course, this is important because cash runway is critical to a company’s ability to continue growing, pay employees, and invest in product development. To understand whether the business can fund its plans and maintain sufficient runway, a pro forma cash flow statement focuses on how cash is expected to move over time across three core areas:

A pro forma cash flow statement tracks projected cash inflows and outflows across these core areas of the business:

• Cash from operating activities: Projected cash generated or used by day-to-day operations, including expected customer payments, payroll, supplier costs, taxes, and interest. This section shows whether the business can sustain itself through operations alone or will need outside funding.
• Cash from investing activities: Estimated cash flows related to long-term investments, such as equipment purchases, technology upgrades, or capital expenditures tied to growth initiatives. This helps teams understand how planned investments affect near-term liquidity.
• Cash from financing activities: Projected cash flows from raising or returning capital, including new loans, debt repayments, equity raises, or dividend payments. This reflects how the business plans to fund growth or manage its capital structure.
• Net cash flow: The combined effect of operating, investing, and financing activities over the period. This highlights whether total cash is expected to increase or decline under the modeled scenario.
• Beginning and ending cash balances: The estimated starting cash position and the projected ending balance after net cash flow is applied. These balances help teams assess cash runway and determine how long the business can operate before additional funding is required.

Looking for a pro forma cash flow statement in Excel format? You're in luck.

Click here to download the free Cash Flow Statement in Excel. 

Benefits of using pro forma analysis

Pro forma analysis helps finance teams model “what if” scenarios, turning raw data into strategy. By forecasting outcomes based on hypothetical events, this approach brings clarity to the financial planning and analysis (FP&A) process. This analysis supports:

1. Financial planning and forecasting

Pro forma statements offer a window into your company’s potential future. By mapping projections against your current numbers, it can give you a sense of whether your business is on track to meet its financial goals and help you identify potential problems.

For example, a business might release a pro forma income statement to set a future revenue benchmark. That projection can account for expected growth in operations, net profit, cash flow, or market shifts. From there, it becomes easier to model capital investments and align resources according to your FP&A analysis.

2. Smarter decision-making

This analysis can help you make informed decisions about investments, marketing strategies, pricing tiers, and other aspects of your business plan. For this reason, it's best practice to create pro forma statements as in-depth financial forecasts. They act as a strategic lens for business planning so you can reverse-engineer decisions based on where you want the business to go.

3. Asset and liability management

Pro forma templates help finance teams assess how major decisions affect assets, liabilities, and overall financial risk. By projecting balance sheet changes in advance, teams can evaluate whether the business can support new obligations without straining liquidity or leverage.

For example, when opening a new location, a pro forma model shows how new assets such as equipment or leasehold improvements stack up against added liabilities like loans or lease commitments. This kind of forward modeling helps prioritize spending and mitigate risk.

4. Securing investments

Investors want to see evidence, not just vision. Pro forma analysis can articulate your growth plan, estimate return on investment, and demonstrate the business case for funding. 

Investors could also use pro forma analysis to assess the potential return on their investment. Almost every fundraiser needs pro forma statements so that potential investors can understand the implications of the new capital infusion.

5. Evaluating protective mergers

Companies often decide to merge with the hope that the combined business will be worth more than the sum of its parts. But, not all mergers create value for shareholders, and some can even cause a loss. 

By modeling multiple pro forma scenarios, finance teams can compare how different assumptions, such as financing structures or revenue growth, affect profitability, cash flow, and balance sheet health. This makes it easier to see whether the deal strengthens the business or introduces risks that could outweigh the expected upside.

Limitations of pro forma analysis

Pro forma analysis is a powerful tool for modeling future performance—but it’s not without its challenges. Because these statements rely on projected data, it’s important to view them as directional, not definitive.

Here are two key limitations to keep in mind:

1. They're based on assumptions

Pro forma analysis is based on your best estimates about the future, such as revenue, costs, and operating expenses. These assumptions may not always be accurate, which can cause misleading results. 

Accuracy also hinges on your inputs. Incomplete or incorrect financial data can quickly lead to misleading conclusions. That said, pro forma statements are still valuable for planning and decision-making when used as directional tools, especially for evaluating potential investments, growth initiatives, or financing scenarios where historical data alone isn’t enough. This is why regulators like the Securities and Exchange Commission (SEC) emphasize transparency and caution around pro forma reporting rather than discouraging its use altogether.

2. It may overlook external forces

Another limitation is that pro forma analysis does not consider all factors that can affect a business's financial situation. They may not fully account for economic volatility, supply chain interruptions, or one-off global events like COVID-19. That’s where tools like scenario analysis and sensitivity analysis become essential in modelling uncertainty and planning for a range of outcomes.

3. They lack standardization

Unlike GAAP-based financial statements, pro forma statements don’t follow a single, standardized format. This means two companies can model similar scenarios using very different assumptions, structures, or adjustments, making comparisons difficult.

Without clear documentation and consistent inputs, pro forma results can be misinterpreted or selectively framed. That’s why it’s critical to clearly outline assumptions and use pro forma analysis as a planning tool, not a substitute for standardized financial reporting.

Start your pro forma analysis with a free template

Pro forma financial statement terms to know

There are a few key terms that you should know when looking at pro forma financial statements.

• Gross margin: The percentage of revenue left after deducting the cost of goods sold (COGS).
• Operating expenses: The costs associated with running a business, such as rent, utilities, and salaries.
• Net income: What’s left after subtracting all expenses from total revenue, often expressed as a percentage.
• EBITDA: Earnings before interest, taxes, depreciation, and amortization. It is a measure of a company's profitability that excludes non-cash and financing-related costs.

Best practices for using a pro forma template

Using a pro forma template effectively comes down to how thoughtfully it’s built and maintained. Follow these best practices to ensure your projections remain realistic, useful, and aligned with real business decisions:

• Start with reliable, up-to-date data: Base your projections on accurate historical financials and current operational data. Weak inputs lead to misleading outputs, no matter how polished the model looks. For example, pull revenue and expense baselines directly from your most recent actuals instead of reusing last year’s assumptions.
• Document your assumptions clearly: Clearly outline growth rates, cost changes, and timing assumptions so stakeholders understand what’s driving the forecast and where uncertainty exists. For instance, note whether revenue growth assumes higher pricing, increased volume, or new customer acquisition. 
• Align models with business goals: Build pro forma statements around specific decisions such as hiring plans, pricing changes, or expansion not abstract forecasts that lack a clear purpose. A hiring-focused pro forma might model headcount growth alongside payroll, benefits, and expected productivity impact.
• Use multiple scenarios: Model best-case, base-case, and worst-case outcomes to understand sensitivity and prepare for downside risk, not just upside potential. This helps teams see how changes like delayed revenue or higher costs affect cash flow and runway.
• Update models regularly: Revisit and adjust pro forma statements as conditions change. Updating assumptions after each close or major decision keeps projections relevant and actionable.
• Use pro forma analysis as a planning tool, not a guarantee: Treat results as directional guidance to inform decisions, not precise predictions of future performance. Pro forma models are most effective when used to compare options and trade-offs, not to lock in fixed expectations.

Download our free pro forma statement templates for Excel or Google Sheets

Looking for a pro forma statement template to create your own financial statements? We've got you covered!

These templates are designed to help finance teams get started quickly without building models from scratch. Each template follows familiar financial statement structures, making it easier to plug in assumptions, model scenarios, and update projections as plans change.

They’re built for Excel and Google Sheets so teams can work in the tools they already use. These templates provide a practical starting point for forward-looking financial planning, whether you’re modeling profitability, cash flow, or balance sheet impact.

3-statement model pro forma template 

Download the 3-statement model

This template forecasts future financial performance by combining three essential reports:

• Income statement: Projects revenue, expenses, and net income, helping you understand profitability under different scenarios.
• Balance sheet: Reflects changes in assets, liabilities, and equity over time, including retained earnings tied to net income.
• Cash flow statement: Tracks cash inflows and outflows. It starts with net income and adjusts for non-cash items and changes in working capital.

Use this model to simulate how strategic decisions, like new investments or staffing changes, will affect your overall financial position.

Budget vs. actuals pro forma template

Download the budget vs. actuals template

This template compares budgeted income and expenses to actual financial results. It helps you:

• Spot variances and performance gaps
• Adjust future budgets more effectively
• Stay aligned with financial targets

Ideal for monthly or quarterly reviews, this tool gives you a clear snapshot of how your business is tracking against its goals.

Pro forma cash flow statement

Download the free pro forma Cash Flow Statement.

This template estimates future cash inflows and outflows over a defined period, focusing on cash activity from operations, investing, and financing.

It helps you:

• Forecast cash runway: See how long the business can operate based on projected cash inflows and outflows.
• Identify liquidity gaps early: Spot periods where cash balances may dip below comfortable levels before they become a problem.
• Evaluate funding needs: Assess whether future plans require additional financing, delayed investments, or tighter expense controls.
• Assess earnings quality: Compare projected operating cash flow to net income to understand whether profits are supported by real cash generation.
• Plan timing-sensitive decisions: Model when to make investments, hire, or repay debt without straining short-term liquidity.