There is a standard method to be followed for developing Pro Forma which includes detailed projection of the time period along with detail forecast of financials and the value of terminal, which is generally known as the market value of your business in future.
Considering Pro forma of PepsiCo from the year 2001, we will forecast on what template must be used to show case qualified pro forma. The template of construction is mentioned in the table 20.1 which indicates three major areas of concern:
- T which is a choice of horizon separating phases at initial as well as terminal stages
- At the time of initial projection phase, the detailed information on financials is mentioned which is from the time +1 to the time T-1.
- The value of the terminal market at the time T-1 which can be considered as the cash flow to eternity from the time T.