Underlying Business refers to the operating entity in which a fund such as private equity fund or venture capital firm has invested, either directly or through dedicated holding companies. The underlying business represents the core business of the enterprise. These are normally referred to as investee firms by the venture capitalist expected to offer returns which the investor uses to validate the investment objectives of the fund. Business valuation focuses on the core underlying business for which reason business valuation analysts adjust financial statements to account for extraordinary revenue and cost items, non-operating assets and liabilities for non-recurring or other unusual items to eliminate anomalies and facilitate comparisons. Examples of income statement adjustments are exclusion of one-off non-recurring income and expenditures, exclusion of expenditures not related to business operations, or writing up some expenditure items which have been understated. Balance sheets are normally adjusted by the revaluation of fixed assets to reflect current market value and non-operating assets excluded in applying the net asset method of business valuation.