For me, a pro forma is a simple evaluation of the feasibility
of a project or investment. It begins with determining
the revenues that can be generated from the project,
deducting all costs and expenses of generating those revenues,
and arriving at a profit figure. This profit figure is
then divided into the cost of the total project in the first
place to determine an expected rate of return. Based on this
expected rate of return, calculated conservatively, you can
determine whether it is a good investment in comparison
with other investment opportunities. A pro forma is a basic
staple of all business calculations.