Pro Forma Statement

The expression pro forma is derived from Latin meaning 'according to form'. In effect, this expression usually denotes fiscal declarations that provide an idea about the estimated outlays and earnings from a venture that is present or a new one.

However, the phrase 'pro forma' has assumed a somewhat different denotation in the case of real estate brokerage. When a real estate marketing agent prepares a pro forma statement, the declaration generally focuses on nothing other than the available funds or the money earned through investments in realty. This type of pro forma declarations can be produced by making use of a simple and straightforward rundown of the anticipated earnings and expenditures resulting to cash flows or available funds for a particular time frame. This cash flow can be both - the money available before tax or after tax. On the other hand, an extensive or all-inclusive pro forma declaration usually incorporates a through fiscal prediction that includes a meticulous study or breakdown of expansion spending, profits/ expenditure estimations, funding approximations and the return on investment (ROI) or the amount of profit.

Gradually more and more real estate practitioners such as realty brokerage firms and marketing agents have begun to depend on a regulated/ systematic exploratory format in order to scrutinize profits on real estate investments that is also known as the cash flow model. Such a form offers a structure to study the investments on real estate founded on the functional cash flow and the profits earned from the sales limited to a definite venture or holding phase. In such cases the marketing agents are able to offer a comparative study on the real estate investments to their patrons/ clients making use of economical cash flow methods to attain the profit after taxation at the prevailing rates and in-house percentage of profits.

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