Accounting analysis: the basics - Recasting financial statements
3 important questions on Accounting analysis: the basics - Recasting financial statements
The first task for the analyst in accounting analysis is therefore to recast the financial statements into
A common format
Although the classification of operating expenses by function potentially provides better information about the efficiency and profitablity of a firm, some analysts prefer the classification of expenses by nature because
This classification is less arbitrary and requires less judgment from the management
In sum, following the preceding general rules, we classify balance sheets items along the following dimensions:
Business (operating and investment) versus financial assets
current versus non current assets or liabilities
assets or liablities from continued vs discontinued operations
current versus non current assets or liabilities
assets or liablities from continued vs discontinued operations
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