Assess how good a company's financial figures are and propose adjustments that make them more reliable and comparable with peers, including adjustments for differing accounting standards, methods and assumptions

Adjustments put companies on the same footing. To compare a US GAAP LIFO company with a FIFO peer, add the LIFO reserve to inventory, add the reserve times one minus the tax rate to equity and the rest to deferred tax, and adjust cost of sales by the change in the reserve. Remove goodwill when comparing tangible returns; add capitalised interest back to interest expense for coverage; treat pension deficits and other debt-like items as debt; restate a company that capitalises development costs to expense them if its peer does. Each adjustment should keep the balance sheet in balance and apply tax where relevant. The trap is adjusting one side of the statements and forgetting the other.