I need an example of a pro forma balance sheet. Say the company's current assets are: Assets $100 Debt $10 Equity $90. I don't understand how this relates to the equity financing.

A pro forma balance sheet looks like any other balance sheet. It's sort of a budgeted "what if" of the future, rather than a factual reporting of the past. i.e. a projected balance sheet. It would be based on prior actual figures and projections of the future. (For a new company, it's all projection.)

If you already have numbers, it just looks like a balance sheet, like any other.

Now actually doing one is an entirely different matter, because projecting the future can be a complicated matter. You'd have to already have a projected income statement, and cash flows, and some other info.

How it relates to equity financing is that these can be used to analyze what is going on in the company. You can analyze them the same way you can analyze an actual past financial statement. So for instance, you can analyze the balance and consequences of the debt and equity financing. If a company were considering new financing, that would be a perfect time to do one.

Current balance sheet assets 100 debt 10 equity 90

Pro forma balance sheet
Assets 100

Debt
Equity

Current balance sheet
Assets 100
Debt 10
Equity 90

Pro forma

Assets 100

Debt
Equity

What happen to cost of capital and why

If a firm uses too much financing why would capital rise

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