In business valuation analysis, Adjusted Income Statement (also referred to as Normalised Income Statement) refers to the situation where the comprehensive income statement of a business entity is adjusted by excluding non-related income and expenditure items as well as adjusting income and expenditure items upwards or downwards to eliminate overestimation and underestimation. One area of adjustment in the income statement of private businesses is the compensation of entrepreneurs and business owners. In most instances, entrepreneurs and business owners do not take salaries or pay themselves far below the industry levels. To ensure that the expenditure items reflect the situation at the market, the salaries of the business owner is increased accordingly in which case the adjusted income statement may show a lower profit level or even losses based on the extent of the adjustments. It is important to appreciate that the essence of an adjustment to the income statement is not to “correct” the income statement but rather to address distortions by the inclusion of unrelated items, overestimation and underestimation of income and expenditure items.