Assignment 2

Analyzing financial statements

The statement is true that the future forecasts require the information and data that occurred in the past. The chapter starts off with the illustration of Sydney Fish Market and their investment strategy. The imaginations and expectation bore from the strategic illustration of the preceding data analysis bores investment. With all study and chapter scan written by the writer, it is very fair to say that he presents his ideas with exquisite examples and metaphors. As explained earlier the future of a firm or an investment company is predicted using the past, in this case, financial statements. Financial statement is the records and the ultimate design to better understand the insights and conditions. The values and numbers give the ability to the responsible individuals to create a viable project for the company.

This chapter clearly deals with the foundation that financial statements create for the justification and prediction of the firm’s future agenda. Financial statements revolve around the values and numbers, revenues and profits, income and equity. In plain words, financial statements illustrates how does the investment creates cash flow through the system to generate certain profit or loss to result final revenue. I can almost tell that restating and analyzing financial statements is quite a time consuming and frustrating process since it requires the manipulation of the values accurately. A slight misinterpretation in the data can destroy the whole structure.

Restating Millennium Hotel’s financial statements

Restating the financial statement for Millennium Hotels was quite a challenge. However, I learnt a lot during the process. Separating the operating and financial activities made me realize the difference and their role in the income statement. The financial statement as presented seems organized and everything seems to be at their places but I am not trying to exaggerate by saying that it is very time consuming and nail biting. There were several times that my calculations went wrong and I wouldn’t get the correct Net Profit. After a series of hair pulling and intense interpretation I somehow figured it out.

 

I will be very honest by saying that before reading chapter 4 when I found out about Restating financial statement I completely freaked out. I had absolutely no idea where to begin. But after scanning through the topics, it slowly came to me. The collaboration of income statement and balance sheet to produce statement of equity was illustrative to know about. I learnt the difference between operating activities and financial activities during the process and how they contribute to the comprehensive income. The operating activity is the core whereas the financial activity is the enclosure.

As a rookie in accountings, I will have to say that a single individual cannot solely perform this. I had to discuss many issues that I had with my classmates and lecturer.  Group discussion is very much helpful in dissecting the values and data provided. A group insight is always better than an individual one. I had considerable amount of help from my colleagues in figuring out the tax benefit and the net profit and net tax. There were times where I stumbled upon the formulas and numbers making me almost crazy.