Step 2: Restate financial's statement

This is my financial's statement table those have completed restated. Please have a look and give me your feedback.

1. STATEMENT OF CHANGING IN EQUITY

2.BALANCE SHEET

3. INCOME STATEMENT

Chapter 4: analysing financial statements

Chapter 4: ANALYSING FINANCIAL STATEMENTS

After read through a chapter, there are some key concepts that I found:

       1.The two common frameworks used by people to analyse firms:

The discount cash flow (DCF) and economic profit frameworks.

·        An example about Ryman Healthcare is very clearly for me to understand Free Cash Flow. As I know, free cash flow refer to the amount of cash available from operations after paying for planned investments in plant, equipment and other long-term assets, and after paying dividends to shareholders. Cash flows are important to company’s survival. Cash flow data help to spot losers than they help to spot winners. When a company’s business is booming, profits are high and cash flows are usually improving. A negative cash flow from operations warrants investigation. A cash turndown in a single year is not necessarily a danger signal, But negative cash flows for two consecutive years may throw a company into liquidation. Without cash flow from operations, a business simply cannot survive.

·        The economic profit model highlights how and when the company creates value yet leads to a valuation that is identical to that of enterprise DCF. An advantage of the economic profit model over the DCF model is that economic profit is a useful measure for understanding a company’s performance in any single year, whereas free cash flow is not.

          Economic profit = (RNOA-Cost of capital)* NOA

Where RNOA = OI/NOA

  2. The most powerful way of viewing a business: viewing a firm as having separate operating and financial activities.

We need to know what is operating and financial activities. After having an understanding about that, we can separate them easily. A firm’s Operating activities, which is usually where value is added (or destroyed) by a firm. Financial activities relate to loan, bank, borrowing....

The first thing I need to do in my assignment is that I need to separate two those activities to start restating financial statements.

  

  3. Restate two key financial statements: balance sheet and income statement.

I have a big question for this section: why the company do not restate their financial statement before they have been public?

A balance sheet statement is so easy to restate if I can separate the operating and financial assets and liabilities of my company.