Final answer:
The first estimate made when preparing pro forma statements is typically the sales revenue, which is essential for projecting other financial figures.
Step-by-step explanation:
When preparing pro forma statements for a business, the first estimate you are most apt to make is sales revenue. This is because sales revenue serves as the basis for various other projections, as it impacts the estimation of costs and expenses directly related to production and sales. Considering the strategies that can aid in the art of estimation, it's crucial to understand how variables may be connected. For instance, firms in their early stages that possess innovative ideas or prototypes but lack a customer base and are not yet profitable face a unique challenge in raising financial capital, as prospective investors seek a rate of return on their investment.
To initiate this process, one would begin by estimating the sales revenue, aligning known factors like market demand, pricing strategies, and competitive analysis, to arrive at a plausible forecast. After establishing the revenue estimates, costs and expenses can be deducted to calculate potential profits or losses. This initial step is vital as it influences all subsequent financial projections within the pro forma statements.