Summary Reformulated Financial Statements

Reformulated Financial Statements


Reformulated Financial Statements: The Steps


1. Restate CSE
+ CSE from balance-sheet
- Preferred stock
- Non-controlling (or minority) interest
- Unearned compensation (or deferred compensation)
+ Dividend payable


2. Calculate d (net transactions with shareholders)
+ cash dividends = dividends declared - change in dividends payable
+ share repurchases
- share issues
Information could be found in the C/F statement and/or in the statement of changes in equity.


3. Get CI
ΔCSE
+ d
= CI


alternative approach: get OCI first
NI
+ OCI
= CI


4. Reformulate the balance-sheet
easier to identify NFO first
then use NOA = NFO + CSE




5. Reformulate Income Statement
CI is already obtained from step 3
To calculate NFE:
+ interest expense
- interest revenue
+/- realised losses/gains on financial assets
+ payments to preferred stock



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