Pro forma financial statements are a type of financial document that aims to present a stipulative financial outcome for a company. These statements are not based on actual historical data but rather are developed using assumptions and projections about future conditions. They are frequently used for business planning, forecasting, or during events such as mergers and acquisitions. For example, a company might create a pro forma income statement to estimate financial performance if they were to acquire another company. Business owners and analysts often use pro forma financial statements to evaluate the potential financial impact of strategic decisions. A sentence example: 'The team prepared pro forma financial statements to analyze the expected outcome of the company's expansion into a new market.'