Pro Forma Income Statement Calculator
This calculator is designed to help business professionals create pro forma income statements. It is aimed at individuals seeking a reliable tool for financial forecasting and planning.
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Data Source and Methodology
All calculations are based on standard financial accounting principles and methodologies. For detailed financial definitions, visit Investopedia. All calculations are rigorously based on formulas and data from this source.
The Formula Explained
Net Income Before Tax: \( \text{Revenue} - \text{Cost of Goods Sold} - \text{Operating Expenses} - \text{Interest} \)
Tax: \( \text{Net Income Before Tax} \times \left(\frac{\text{Tax Rate}}{100}\right) \)
Net Income: \( \text{Net Income Before Tax} - \text{Tax} \)
Glossary of Variables
- Revenue: Total income generated by sales of goods or services.
- Cost of Goods Sold: Direct costs attributable to the production of goods sold by a company.
- Operating Expenses: Expenses incurred during regular business operations.
- Interest Expense: Cost incurred by an entity for borrowed funds.
- Tax Rate (%): The percentage at which an individual or corporation is taxed.
How It Works: An Example Step-by-Step
Consider a company with $100,000 in revenue, $40,000 in COGS, $20,000 in operating expenses, and a 30% tax rate. The net income before tax is $40,000, the tax is $12,000, and the final net income is $28,000.
Frequently Asked Questions (FAQ)
What is a pro forma income statement?
A pro forma income statement is a financial statement that uses projections or hypothetical scenarios to forecast future income.
How do I calculate net income?
Net income is calculated by subtracting all expenses, including taxes, from total revenue.