Sometimes terms are used in a meeting, everyone nods their heads in agreement (including me), but then I walk away feeling like I did not understand perfectly what was being said. I have often times seen this as a sales technique….people are afraid to ask questions so the sales person uses terms they realize the potential client will not understand and will intimidate.
Anyway, the term “Pro Forma” was used in a meeting the other day and although I had a general understanding, I thought I would look it up anyway and write this quick blog post.
Projected earnings based on a set of assumptions and often used to present a business plan (in Latin pro forma means “for the sake of form”). It also refers to earnings which exclude non-recurring items. Pro-forma earnings are not derived by standard GAAP methods.