What does a pro forma statement project?

A pro forma statement is designed to project future results based on hypothetical factors. It is a financial document that estimates the future financial performance of a business or investment based on certain assumptions. These assumptions can include aspects like future sales growth, cost reductions, or changes in operating expenses, allowing investors or managers to plan strategically or evaluate the impact of business decisions before they are actually implemented.

Pro forma financial statements are especially useful in the context of investment analysis as they help in forecasting potential income, expenses, and profitability under various scenarios, rather than reflecting past performance or current market conditions. This forward-looking aspect is what distinguishes pro forma statements from other types of financial documents that may focus on historical data or current operational costs.

Each of the other options represents a different aspect of financial statements or analysis that does not align with the primary function of pro forma statements in projecting future scenarios based on assumptions.