top of page
Search

Understanding Pro Forma Models

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.



 
 
 

Comments

Commenting on this post isn't available anymore. Contact the site owner for more info.
bottom of page