Financial Statements and Forecasts

Financial statements reflect past performance and are usually prepared on a regular basis. Pro forma financial statements project for future periods based on forecasts and are typically completed for two to three years in the future. The most important financial statements include the income statement and the balance statement. Forecasts predict a firm's future sales, expenses, income, and capital expenditures. A well-developed set of financial statements help a firm create accurate forecasts and budgets.