Reformulating financial statements means rewriting them to allow clearer examination of different aspects of the company's business. ... In many cases, a business will reformulate its financial statements to help demonstrate that its performance looks better when you look at it in a different context.

Why do we need to reformulate?

In the income statement, reformulating can help highlight recent changes that led to extra income or a lower income than previously reported. This is often connected with shareholder changes.

Why is it important to compare financial statements?

Comparative financial statements are quite useful for the following reasons: Provides a comparison of an entity's financial performance over multiple periods, so that you can determine trends. The statements may also reveal unusual spikes in the reported information that can indicate the presence of accounting errors.