Recast Financial Statements
Financial statements of the business that are adjusted to reflect the actual financial benefits of business ownership.
What It Means
Most small businesses are managed to minimize taxable income. Thus, it is often necessary to make adjustments to the reported financial statements in order to express the actual cash flow benefits available for the owner. Adjusting the business financial statements facilitates its comparison to the industry standard ratios.
Here are some Balance Sheet items that may require adjustment:
Some items on the Profit and Loss Statement that may require adjustment are:
It is strongly suggested that you consult your professional financial advisor or business appraiser when recasting the financial statements of a business you are planning to buy or offer for sale.
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