NAME: PRANSHU

AGARWAL
SUBJECT: ACCOUNTS
UID - 7558024
 TOPIC
PREPARATION OF A COMMON
SIZE AND COMPARATIVE
INCOME STATEMENTS AND
BALANCE SHEET OF A COMPANY
ACKNOWLEDGEMENT
I would like to express my special thanks of
gratitude to my Accounts teacher Dr.
Rachna Kejriwal for giving me a golden
opportunity to do this wonderful project on
comparative and common-size statements.
Her guidance, suggestion and instructions
served as a major contribution towards the
completion of this project. I would also like
to thank my parents and friends for helping
me in finalizing this project within the limited
time frame.
 INDEX
 Introduction – comparative statements
 Comparative Balance Sheet-
meaning, features, advantages,
disadvantages and format
 Sum on comparative balance sheet
 Comparative income statement -
meaning, features, advantages,
disadvantages and format
 Sum on comparative income statement
 Common-size statement
 Common-Size Balance Sheet-
meaning, features, advantages,
disadvantages and format
 Sum on Common-size balance sheet
 Common-size income statement -
meaning, features, advantages,
disadvantages and format
 Sum on Common-size income
statement
 Acknowledgement
 Bibliography
INTRODUCTIO
N
COMPARATIVE
STATEMENTS
A comparative statement is a document used
to compare a particular financial statement
with prior period statements. Previous
financials are presented alongside the latest
figures in side-by-side columns, enabling
investors to identify trends, track a
company’s progress and compare it with
industry rivals. Analysts, investors, and business
managers use a company’s income
statement, balance sheet, and cash flow
statement for comparative purposes.
Comparative statements show the effect of
business decisions on a company. Trends
are identified and the performance of
managers, new lines of business and new
products can be evaluated, without having
to flip through individual financial
statements. Comparative statements are less
reliable when companies undergo huge
changes. A
big acquisition and move into new end
markets can transform businesses, making
them different entities from previous
reporting periods. Comparative statements
can also be used to compare different
companies.
 COMPARATIVE
BALANCE SHEET
A comparative balance sheet is a
statement that shows the financial position
of an organization over different periods for
which comparison is made or required. The
financial position is compared with two or
more periods to depict the trend, direction of
change, analyze and take suitable actions.

FEATURES

 It is the study of the trend of the same

items, group of items and computed
items.

 It is the horizontal analysis of balance

sheet in which each item of assets,
equity and liability is analyzed
horizontally for two or more
accounting period.

 It analyses each item in absolute amount

as well as in percentage.
ADVANTAGES
 Comparison – It is effortless to
compare the figures for the current
year with the previous years as it gives
both the years’ figures in one place.
Helps to compare one company’s
performance with another company or
the industry’s average performance.

 Helps in Forecasting – It also helps in

forecasting because it provides the past
trend of the company based on which
the management can forecast the
company’s financial position.

DISADVANTAGES
 Uniformity in Policy and Principles
– Comparative balance sheets will not give
the correct comparison if two companies
have adopted different policies and
accounting.

 Market Situation and Political Conditions not

Considered – While preparing the
comparative balance sheet, marketing
conditions, political environment, or any
factor affecting the company’s business
are not considered. Therefore, it does
not give the correct picture every time.
FORMAT
 Balance sheet of Ashok ltd.

Particulars Note Current Previous

no. year 2022 year2021

I.EQUITY AND
LIABILITY
1. Shareholder’s Fund
(a) Share Capital 25,00,000 25,00,000
(b) Reserves and 6,00,000 5,00,000
Surplus
2. Non-current
Liabilities
Long-term borrowing 15,00,000 15,00,000

3.Current Liabilities
(a)Short-term 2,40,000 2,25,000
borrowings
(b)Trade Payables 2,25,000 2,00,000
(c)Others Current 55,000 50,000
liabilities
(d) Short-term 25,000 25,000
Provisions

Total

51,50,000 50,00,000

II. ASSETS
1.Non-current Assets
(a) Property, plant and
equipment and 36,00,00 30,00,000
intangible Assets –
Property, plant and
equipment
(b) Non-current 5,00,000 5,00,000
Investments

2. Current Assets
(a) Inventories 5,50,000 7,50,000
(b)Trade Receivables 3,00,000 5,00,000
(c)Cash and Bank 1,75,000 1,50,000
Balances
(d)Other Current Assets 25,000 1,00,000

Total 51,50,000 50,00,000

 Comparative balance sheet of Ashok ltd as at 31st March, 2022 and 2021

Particulars Note Current Previous Absolute change Percentage change

no. year 2022 year 2021 (increase/decrease) (increase/decrease)

I.EQUITY AND
LIABILITY
1. Shareholder’s
Fund
(a) Share Capital 25,00,000 25,00,000 ………… ….………..
(b) Reserves and
Surplus 6,00,000 5,00,000 1,00,000 20.00
2. Non-current
Liabilities
Long-term
borrowing 15,00,000 15,00,000 ………….. ……………

3.Current Liabilities
(a)Short-term
borrowings
(b)Trade Payables 2,40,000 2,25,000 15,000 6.67
(c)Others Current
liabilities 2,25,000 2,00,000 25,000 12.50
(d) Short-term 55,000 50,000 5,000 10.00
Provisions
25,000 20,000 5,000 20.00
Total
51,50,000 50,00,000 1,50,000 3.00
II. ASSETS
1.Non-current
Assets
(a) Property, plant
36,00,000 30,00,000 6,00,000 20.00
and equipment and
intangible Assets –
Property, plant and
equipment
(b) Non-current 5,00,000 5,00,000 ……………. ……………..
Investments

2. Current Assets
(a) Inventories 5,50,000 7,50,000 (2,00,000) (26.67)
(b)Trade Receivables 3,00,000 5,00,000 (2,00,000) (40.00)
(c)Cash and Bank
Balances 1,75,000 1,50,000 25,000 16.67
(d)Other Current
Assets 25,000 1,00,000 (75,000) (75.00)

Total

51,50,000 50,00,000 1,50,000 3.00

 Equity and liabilities
3000000
2500000
2000000
1500000
1000000
500000
0

share reserves long term short termtrade othershort term

capital and surplus borrowings borrowings payables currentprovisions
liabilities

31.03.2231.03.21

Assets
4000000
3500000
3000000
2500000
2000000
1500000
1000000
500000
0

propertynon current inventoriestrade cash andother current

plant andinvestments receivables bank balances assets
equipment

31.02.2231.02.21
 Absolute change

100000
90000
80000
70000
60000
50000
40000
30000
20000
10000
0

reserves andshort term trade other current short term

surplus borrowing payables liabilities provisions

Percentage change

20%
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%

reserves andshort term trade other currentshort term

surplusborrowing payables liabilities provisions
COMPARATIVE
INCOME
STATEMENT
Comparative Statement of profit and loss is
the horizontal analysis of statement of profit
and loss which shows the operating results for
the compared accounting periods, changes in
data in terms of absolute amount and
percentage from one period to
another. Horizontal analysis is a trend
analysis where the firm compares ratios,
statements etc. over a period of time.

FEATURES
 It shows the net profit earned or net loss
incurred by the company during the
year.

 It shows increase and decrease in

revenues and expenses in absolute
values.

 It shows the percentage changes in

revenues and expenses.
ADVANTAGES
 It makes analysis simple and fast as past
figures can easily be compared with the
current figures without referring to
separate past Income Statements.

 It also makes comparisons across

different companies easy and helps
analyze the efficiency, both at Gross
Profit Level and Net Profit Level.

DISADVANTAGES
 Financial Data reported in the
Comparative Income Statement is
useful only if the
same accounting principles are followed
to prepare such statements. If the
deviation is observed, such a
Comparative Income Statement will
not serve the intended purpose.

 A comparative Income Statement is

not of much use in cases where the
company has diversified into new
business lines, which have drastically
impacted Sales and profitability.
 FORMAT
Comparative income statement for the year ended ….

Particulars Note Current Previous Absolute Percentage

no. year’s figure year’s figure change change

I. Revenue of
operation

II. Other Income

III. Total Revenue

IV. Expenses

Cost of materials
consumed

Purchase of
stock in trade

Changes in
inventories of
finished goods,
work-in-progress
and stock-in-trade

Employees
Benefit Expenses

Finance costs

Depreciation
and amortization
expense

Other expenses

Total Expenses

V. Profit before tax

VI. less tax

VII. Profit after tax

 Statement of profit and loss of Matrix Ltd.
Particulars 31st March, 2016 31st March, 2015
Revenue from operation 3,00,000 2,50,000

Cost of material consumed 1,70,000 1,50,000

Interest from investments 20,000 20,000

Employee Benefit Expenses 10,000 10,000

Tax rate 50% 50%

 Matrix ltd.

COMPARATIVE STATEMENT OF PROFIT AND LOSS

For the year ended 31st March, 2016 and 2015

Particulars Note 31st 31st Absolute Percentage
no. March, March, change change (%)
2016 2015
I. Revenue from 3,00,000 2,50,000 50,000 20.00
operations
20,000 20,000 …….. ……..
II. Other Income
3,20,000 2,70,000 50,000 18.52
III. Total revenue

IV. Expenses

Cost of material
consumed 1,70,000 1,50,000 20,000 13.33

Employee Benefit 10,000 10,000 …… …….

Expenses

Total Expenses
1,80,000 1,60,000 20,000 12.50
V. Profit before
tax 1,40,000 1,10,000 30,000 27.27

Less: tax 70,000 55,000 15,000 27.27

VI. Profit after tax 70,000 55,000 15,000 27.27

 31.03.1631.03.15

0
0
30000

320

270000
250000

20000

20000
REVENUE FROM OTHER INCOME TOTAL REVENUE
OPERATIONS

31.03.1631.03.15

0
0
17000

160000
180
150000

10000

10000

COST OF E M P L O Y E ET O T A L E X P E N S E
MATERIAL BENEFIT
CONSUMED EXPENSES

31.03.1631.03.15
0
1400

110000

70000

70000
55000

55000

P R O F I T B E F O R EL E S S : T A X PROFIT AFTER
TAX TAX
 Absolute change

50000 50000

30000

20000 20000
15000

revenue fromtotal revenue cost of material total expensesprofit before taxprofit after tax
operation consumed

Percentage change

27.27% 27.27%

20%
18.52%

13.33% 12.50%

revenue fromtotal revenue cost of material total expensesprofit before taxprofit after tax
operation consumed
 COMMON- SIZE
STATEMENTS
Common size statement is a form of
analysis and interpretation of the financial
statement. It is also known as vertical
analysis. This method analyses financial
statements by taking into consideration
each of the line items as a percentage of
the base amount for that particular
accounting period.
Common size statements are not any kind of
financial ratios but are a rather easy way to
express financial statements, which makes it
easier to analyze those statements.
Common size statements are always expressed
in the form of percentages. Therefore, such
statements are also called 100 per cent
statements or component percentage
statements as all the individual items are taken
as a percentage of 100.
It is not helpful in the decision-making
process as it does not have any approved
benchmark. For a business that is impacted
by fluctuations due to seasonality, it can be
misleading.
COMMON- SIZE
BALANCE SHEET
A common size balance sheet is a statement
in which balance sheet items are being
calculated as the ratio of each asset in
relation to the total assets. For the liabilities,
each liability is being calculated as a ratio of
the total liabilities. Common size balance
sheets can be used for comparing companies
that differ in size. The comparison of such
figures for the different periods is not found
to be that useful because the total figures
seem to be affected by a number of factors.

FEATURES
 It is the vertical analysis of balance sheet.

 It shows assets, equity and liabilities in

absolute term.

 It shows assets, equity and liabilities

as percentage of total assets or total of
equity and liabilities.
ADVANTAGES
 Common-size balance sheet helps the
users of financial statement to make clear
about the ratio or percentage of each
individual item to total assets/liabilities
of a firm.

 A Common-Size balance sheet helps an

analyst to find out a trend relating to
percentage share of each asset in total
assets and percentage share of each
liability in total liabilities.

DISADVANTAGES
 Common-Size balance sheet does not
help to take decisions since there is no
standard ratio/percentage regarding
the change of percentage in the various
component of assets/ liabilities.

 If consistency in the accounting

principle, concepts, conventions is not
maintained then Common Size balance
sheet becomes useless.
 FORMAT
Common-size balance sheet as at……
Particulars Note Absolute amounts Percentage of balance
no. sheet total
Current Previous Current Previous
year year year% year%

I. EQUITY AND LIABILITIES

1. Shareholder’s fund
(a) share capital
(b) reserves and surplus

2. Non-current Liabilities
(a) long-term borrowings
(b) long-term provisions

3. Current Liabilities
(a) Short-term borrowings
(b) Trade payables
(c) Other Current liabilities
(d) Short-term Provisions

100 100
Total

II. ASSETS
1. Non-Current assets
(a) Property, plant and equipment and
intangible assets
(i) Property, plant and equipment
(ii) Intangible assets
(b) Non-current Investments
(c) long-term loans
2. Current assets
(a) Current investments
(b) Inventories
(c) Trade receivables
(d) Cash and Bank balances
(e) Short-term loans and advances
(f) Other Current assets
Total 100 100
 Data of the company Mint ltd.
Particulars 31st March, 2014 31st March, 2013
Share capital 1,50,000 1,20,000
Reserves and surplus 30,000 30,000
Trade payables 20,000 40,000
Fixed Tangible assets 2,00,000 1,90,000

COMMON-SIZE BALANCE SHEET of MINT LTD. As at 31st March 2014 and 2013

Common-size balance sheet as at……

Particulars Note Absolute amounts Percentage of balance
no. sheet total

31st 31st 31st 31st

March March, March, March,
2014 2013 2014 2013

I. EQUITY AND LIABILITIES

1. Shareholder’s fund
(a) Share Capital
1,50,000 1,20,000 75.00 63.16
(b) Reserves and Surplus
30,000 30,000 15.00 15.79
2. Current Liabilities
Trade payables
20,000 40,000 10.00 21.05
Total
2,00,000 1,90,000 100.00 100.00

II. ASSETS
1. Non-current assets
Property, Plant and equipment and
intangible Assets – Property, plant and 2,00,000 1,90,000 100.00 100.00
equipment
Total 2,00,000 1,90,000 100.00 100.00
 Absolute amounts
250000

200000

150000

100000

50000

0
share capitalreserves and surplustrade payablesproperty plant and
equipment

31.03.1431.03.13

percentage of balance sheet total

120%

100%

80%

60%

40%

20%

0%
share capitalreserves and surplustrade payablesproperty plant and
equipment

31.03.1431.03.13
COMMON- SIZE
INCOME
STATEMENT
This is one type of common size statement
where the sales are taken as the base for all
calculations.
Therefore, the calculation of each line item
will take into account the sales as a base,
and each item will be expressed as a
percentage of the sales. It analyses the
change in the individual item of statement of
profit and loss. It studies the trend in
different items of revenues and expenses.

FEATURES
 It is the vertical analysis of income
statement.

 It shows revenues and expense in absolute

values

 It also shows revenues and expenses

as percentage of revenue from
operations; for different periods of the
same firm or two firms.
ADVANTAGES
 Common-size income statement helps
the users of financial statement to make
clear about the ratio or percentage of
each individual item to revenue from
sales of a firm.

 A Common-Size income statement

helps an analyst to find out a trend
relating to percentage share of each
aspect in the income statement to the
revenue from sale.

DISADVANTAGES
 Common-Size income statement does
not help to take decisions since there is
no standard ratio/percentage
regarding the change of percentage in
the various component of the
statement.

 If consistency in the accounting

principle, concepts, conventions is not
maintained then Common Size
income statement becomes useless.
 FORMAT
COMMON-SIZE INCOME STATEMENT for the year ended …

Particulars Note Current Previous Percentage of revenue

no. year’s year’s from operation
figure figure
Current Previous
year year
100 100
I. Revenue from operations
II. Other Income
III. Total revenue
IV. Expenses
Cost of materials consumed
Purchases of stock in trade
Changes in inventories, work-in-progress
and stock-in-trade
Employees benefit expenses
Finance costs
Depreciation and amortization
Other expenses
Total expenses
V. Profit before tax
Less tax
VII. Profit after tax
 Data of statement of profit and loss of Paritosh Ltd.
Particulars 31st March, 2014 31st March, 2013
Revenue from operation (% of other Income) 200% 200%
Other income 2,00,000 1,50,000
Cost of materials consumed (% of Operating income) 60% 50%
Other expenses (% of material cost) 10% 20%
Tax rate 30% 30%

Paritosh Ltd.
COMMON-SIZE STATEMENT OF PROFIT AND LOSS
For the year ended 31st March, 2016 and 2015
Particulars Note 31st 31st Percentage of revenue
no. March, March, from operation
2014 2013
Current Previous
year year

I. Revenue from operations 4,00,000 3,00,000 100.00 100.00

II. Other Income 2,00,000 1,50,000 50.00 50.00

III. Total revenue 6,00,000 4,50,000 150.00 150.00
IV. Expenses
Cost of materials consumed 2,40,000 1,50,000 60.00 50.00
Other expenses 24,000 30,000 6.00 10.00
Total expenses 2,64,000 1,80,000 66.00 60.00
V. Profit before tax 3,36,000 2,70,000 84.00 90.00
Less tax 1,00,800 81,000 25.20 27.00
VII. Profit after tax 2,35,200 1,89,000 58.80 63.00
 percentage of revenue from operations
160%
140%
120%
100%
80%
60%
40%
20%
0%

revenue from other income total revenue

operation

31.03.1431.03.13

percentage of revenue from operations

70%
60%
50%
40%
30%
20%
10%
0%

cost of material other expenses total expenses

consumed

31.03.1431.03.13

percentage of revenue from operations

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

profit before tax less: tax profit after tax

31.03.1431.03.13
 CONCLUSION
Comparative statements help a company to
judge its performance and position over
years. The comparative analysis not only
enables the management in locating the
problems but also help them to put various
budgetary controls and corrective measures
to check whether the current performance is
aligned with that of the planned targets.
With the help of the comparison of the
financial data of two or more years, the
financial management can easily detect the
problems. By bringing financial numbers for
two or more years at a glance and side by
side, it becomes quite easy to understand
and interpret those numbers. Further, the
presentation of comparative statements helps
to draw conclusions with regard to the
profitability and financial performance of the
firm. These comparative statements also helps
us to compare the financial performance of
the company over number of years. This, in
turn, helps to determine trends, accounting
errors, and more.
BIBLIOGRAPH
Y
 www.google.com

 www.wikipedia.com

 www.byju’s.com

 www.investopedia.com

 Book of MANAGEMENT
ACCOUNTING by T.S. GREWAL