Feltham Model: A Framework For Determining The Value Of A Change In The Information Decision (The Decision Maker)

Abstract

In terms of the requirement on decision making for the company’s performance, financial statement is one of the most important reporting for shareholder or investors whether it is private or public owner. There are two main basic financial statement that are officially provided by the company, they are Balance Sheet and Income Statement. Balance sheet consists of assets, liabilities and equities, while the income statement is a summary of financial results for a period certain. Balance sheet can help to make decision in lending and debt which providing information about the liquidation values. Income statement providing information about the realized profit and also the profit oppurtunities in the future. Feltham and Ohslon model, Surplus Theory describe that the decision can be made by looking company’s performance on income statement and balance sheet.