Pro forma financial statements are an integral part of any business plan, from start-ups to mature firms seeking external financing. Potential investors, including banks, use pro forma statements to assess a firm’s value and ability to generate future returns. Pro forma financial statements include the income statement, balance sheet, and statement of cash flows. Historic financial data is a good starting point to project future expenses for an existing business. The pro forma balance sheet includes projected changes in current assets and current liabilities, planned capital investments that would impact fixed assets, and changes in long-term financing. Current assets and current liabilities are usually estimated as a percentage of sales. Start-ups can use industry or comparable firm ratios as a starting point and make adjustments to reflect their specific situations. The pro forma income statement shows steady and healthy growth in sales and income for Peace Blossom for the next three years.