Financial Statement Analysis. Financial Statements reformulation and Essay

Financial Statement Analysis. Financial Statements reformulation and equity valuation - Essay Example 1). The Corporate Reporting Users’ Forum is right with all their comments. In terms of accounting valuation models, a better picture would be presented if the United Kingdom companies listed in the stock exchanges would prepare financial performance reports classified under the areas of operating, financing and investing activities. The operating activities would pertain to the daily production of sales as well as services offered to their clients. Financing activities refers to those that are infused into the business by creditors and stockholders. Investing activities refers to the sale and purchase of property, plant and equipment accounts (Watkins 1998, p.51). One of the important tools in the hands of professional accountants for ascertaining changes in funds at the disposal of the company, during the course of every accounting year is the Cash Flow Statement. A cash flow statement is mainly categorized in to three heads like, cash flow from operating activities, cash flow from investing activities and cash flow from financing activities. Cash flow from operating activities is mainly dealing with the deduction of major operating expenditure from the revenues attained. Cash flow from financing activities dealing with major receipts and payments, and cash flow from investing activities alludes to the acquisition and disposal of assets or properties. Further, the CRUF group is right in affirming that financial statements should have coherent and cogent classifications that include the balance sheet, income statement and statement of cash flows. The new accounting standards recommended by the IASB and FASB group led by Sir David Tweedie and Bob Herz respectively would definitely resolve perennial problems using the traditional financial reporting standards. The current reporting standards focus on the net income as the benchmark for every business endeavor. The new standards are better because the new