Pro Forma Statement

Definition: A financial statement based on assumptions or projections rather than solely on actual historical results. In property investing, it often forecasts rental income, expenses, and operating results.

Example

An investor projects next year's rent and vacancy to estimate a building's net operating income.

Keep the distinction clear

Label projections clearly and examine the assumptions. A pro forma is not proof that the property has already earned the forecast income.

Related terms

Income Statement · Net Operating Income (NOI) · Vacancy and Collection Losses

Keep studying

Income Approach: NOI, Cap Rate, Property Value, and Cash-on-Cash Return

References: FREC Course II syllabus: investment concepts

Pronunciation (US): proh FOR-muh STATE-ment (capitals show stress)

Pronunciation reference: Merriam-Webster