What is a pro forma financial statement designed to do?

A pro forma financial statement is primarily aimed at projecting future income and expenses. It serves as a planning tool that businesses can use to forecast their financial performance over a certain period. By utilizing assumptions and estimates regarding various factors such as sales growth, costs, and market conditions, pro forma statements allow businesses to create a financial roadmap that helps in decision-making and strategy development.

This aspect is particularly crucial for small businesses seeking funding or investors, as it provides insight into the anticipated financial health of the company. Investors often look for these projections to assess the potential return on investment and the overall viability of the business.

The other options focus on different aspects of financial data. While reflecting the current financial position is a characteristic of balance sheets, providing historical financial data pertains to actual income statements and balance sheets from previous periods. Similarly, summarizing past financial transactions relates to cash flow statements or income statements that document the existing financial state rather than projecting future outcomes. Hence, pro forma financial statements distinctly concentrate on forward-looking projections, which aligns with the correct choice.