Shearman & Sterling LLP
Issue link: https://digital.shearman.com/i/1494417
Financial Statement Requirements for Acquisitions (cont.) What are Pro Forma Financial Statements? Financial Statements – The Basic Requirements 35 • "A financial statement prepared on the basis of some assumed events and transactions that have not yet occurred" (Dictionary of Accounting) • What is the rationale behind the need for pro forma financial statements? • Help investors understand and evaluate the impact of a transaction by showing how it might have affected the company's financials if such transaction had occurred earlier • Such statements should assist investors in analysing the future prospects of the company because they illustrate the possible scope of the change in the company's historical financial position and results of operations caused by the transaction