Page4Q6 Business ReportIntroductionThe purpose of this business report is to explore the rise and fall of ABC learning Australia who forgot their ABCs in accounting and operating business. Key Financial ReportsTo analyze your business health effectively you need to pay much attention to 3 key financial statements: The three major financial reports are as follows:-1.Cash flow StatementThe cash flow statement shows how balance sheet and income changes, affect the flow of cash as a result from operating activities, investing activities, and financing activities. The difference between the operating outflows and operating inflows can broadly indicate a business’s profitability. 2.Balance SheetAt a specific date, the balance sheet tells us the current financial position of a company. That is it tells us what the company owns in regards to assets, what they company owes to other third parties (liabilities), and the amount invested by owner’s into running the business (equity). 3.Income StatementIncome statement explains the change in the net assets a company owns between the start and end of the reporting period. Key lessons to be learned from ABC learning: 1. Recognition of revenue accountsABC learning did not recognize their revenues in the correct accounting manner. Themoney that was used to purchase leases and childcare licenses were recorded as revenue instead of costs. ABC did the same with its subsidiary employees contracts. The effect of the above two moves led to inflated revenue figures which appeared asthough the company was perfoming well..2. Remember to continue to focus on the core business activities In pursuit of growth, the company was chasing its dreams and forgot about fundamental rules of operating an international business. 3.Corporate GovernanceGood corporate governance appeared to be lacking within ABC learning’s framework. This is evident from the related third party transactions with companies run by his brother in law and wife. In addition, Eddie Groves was also involved in a margin call without informing the Board. If the company had implemented proper governing guidelines, a lot of the issues above would have been avoided.

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