Summary:
Pro Forma Models provides Microsoft Excel financial model templates to forecast based on user assumptions.
Institutional investors and other smart-money investors have used pro forma models to project investment performance before committing capital.
Pro Forma Model Definition:
In relation to Pro Forma Models, pro forma is defined as a report based on financial assumptions and projections.
What Is a Pro Forma Model?
A Pro Forma Model is a Microsoft Excel template designed to forecast a report based on user assumptions. Institutional investors and other smart-money investors use pro forma models to project investment performance before putting their capital at risk. Pro Forma Models offers institutional quality financial models at affordable prices.
Components of a Pro Forma Model:
Pro Forma Models come in a variety of formats depending on the purpose, but typically include the following components:
Cover: A professional cover page for the document for aesthetics.
Read Me: This is the starting point of the model that highlights the uses, functionality, modelling process, documentation, and support.
Output: Provides the model output in a high-level and actionable analysis summary that is preformatted to be printed and/or saved as a PDF.
Returns: Showcases the investment-level cash flow, detailed sources and uses, deal-level levered and unlevered returns, as well as GP and LP returns with promote waterfall structure.
Assumptions: User entered and selected assumptions are input in this section. This section drives the entire model.
Pro Forma: Calculates the detailed income statement, balance sheet, and cash flow based on the user input and selected assumptions.
Debt Schedule: Calculates and tracks debt outstanding balance, payments (principal and interest), as well as prepayments based on the user entered and selected assumptions.
Data Validation: Back up of standardized lists utilized within the model.
How to Use Pro Forma Models:
Pro Forma Models provides institutional quality and affordable financial model templates to forecast and annualize a company or investment's future. This differs from traditional financial statement analysis, which is more focused on historical results, rather than being forward looking. Pro Forma Models are commonly used for:
Projecting investment and business returns
Forecast business and investment results before a reporting period is complete
Strategic planning
Capital allocation
Risk assessment
Examples of a Pro Forma Model:
Pro Forma Models has produced institutional quality and affordable financial model templates for a variety of industries and asset classes. Some of the most popular Pro Forma Models are:
Pro Forma Models Considerations:
There are limitations to Pro Forma Models and the associated output. The output documents are based on custom user assumptions, which should not be taken as fact, as they are a forecast of the future. Pro Forma Models products can inform decisions using hypothetical data based on historical trends and future expectations.
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