Why should we bother restating a firm’s financial statements? What benefit could there be in simply re-arranging the elements of a firm’s financial statements?
Why is clearly separating a firm’s operating and financial activities a ‘powerful way of viewing a firm’? What is the difference between a firm’s operating and financial activities? Why is this difference so fundamental that there is benefit in considering each quite separately?
What aspects of a firm’s financial statements drive its return on net operating assets (RNOA)?
Which aspects that you identified in your answer to Question 4–3 above do you think are the most important? What, in turn, drives these accounting drivers of a firm’s financial performance? When analysing a firm’s financial statements, what do you think we should focus on and why?