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But generally, these are the steps you need to take to create them—and the info your pro forma statements should include. Always compare pro forma numbers with standard GAAP financial statements, which must follow strict accounting rules. Misleading or overly positive pro forma financial projections are considered a form of fraud by the SEC. You’d…

When a company repurchases shares, it increases the fractional ownership of all remaining shareholders. Allowance for doubtful accounts is netted from the accounts receivable balance. The company predicts which accounts receivable won’t be paid by customers and writes those off. When the account receivable is written off, it is added to bad debt expense on…

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