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Analysis of Financial Statements: J. K. Shah Classes

Chapter 9 of the Bookkeeping & Accountancy course focuses on the analysis of financial statements, emphasizing their role in assessing a business's profitability, efficiency, solvency, and growth. It introduces tools for financial statement analysis, specifically comparative and common size statements, and outlines the steps to prepare comparative statements for two years. The chapter highlights the importance of comparing financial data side by side to facilitate analysis.

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44 views1 page

Analysis of Financial Statements: J. K. Shah Classes

Chapter 9 of the Bookkeeping & Accountancy course focuses on the analysis of financial statements, emphasizing their role in assessing a business's profitability, efficiency, solvency, and growth. It introduces tools for financial statement analysis, specifically comparative and common size statements, and outlines the steps to prepare comparative statements for two years. The chapter highlights the importance of comparing financial data side by side to facilitate analysis.

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kvenkatagiriraju
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J. K. SHAH CLASSES S.Y.J.C.

- BOOKKEEPING & ACCOUNTANCY

CHAPTER 9 ANALYSIS OF FINANCIAL STATEMENTS

Weightage: 16 Marks

Practical question 8 Marks Objectives 2 Mark

Meaning of Financial Statements


Financial Statements are statements which are prepared by the business to find out
profitability, efficiency, solvency, growth of business to judge the financial strength
and status of the business.

TOOLS OF FINANCIAL STATEMENT ANALYSIS

COMPARATIVE AND COMMON SIZE STATEMENTS

These statements are prepared for these financial Statements.

Revenue Statement Balance Sheet

A. Comparative statements
Comparative statements shows financial data for two years placed side by side to
facilitate comparison.

STEPS TO PREPARE COMPARATIVE STATEMENTS


 Enter the details of Assets and liabilities or Incomes and Expenses in the first
Column.
 Enter the amounts of previous year’s in second column.
 Record the amounts of Current Year’s in the third year.
 Record the Absolute changes (i.e. difference between the column of current
year and previous year) in fourth column.
 Record the percentage changes in the fifth column.

: 25 :

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