3. COMPARATIVE
STATEMENT
THE COMPARATIVE FINANCIAL STATEMENTS ARE
STATEMENTS OF THE FINANCIAL POSITION AT
DIFFERENT PERIODS; OF TIME . THE ELEMENTS
OF FINANCIAL POSITION ARE SHOWN IN A
COMPARATIVE FORM SO AS TO GIVE AN IDEA OF
FINANCIAL POSITION AT TWO OR MORE PERIODS .
ANY STATEMENT PREPARED IN A COMPARATIVE
FORM WILL BE COVERED IN COMAPARATIVE
STATEMENTS. FROM PRACTICAL POINT OF VIEW ,
GENERALLY TWO FINANCIAL STATEMENTS
( BALANCE SHEET AND INCOME STATEMENT)ARE
PREPARED COMPARATIVE FORM FOR FINANCIAL
ANALYSIS PURPOSES.
4. NOT ONLY THE COMPARISON OF THE TWO
FIGURES OF TWO PERIODS BUT ALSO BE
RELATIONSHIP BETWEEN BALANCE- SHEET
AND INCOME STATEMENT ENABLES AS IN
DEPTH STUDY OF THE FINANCIAL POSITION
AND OPERATIVE RESULTS.THE
COMPARATIVE STATEMENT MAY SHOW:
1.ABSOLUTE FIGURES (RUPEE AMOUNTS )
2.CHANGES IN ABSOLUTE FIGURES I.E.
INCREASE OR DECREASE IN ABSOLUTE
FIGURES
3.ABSOLUTE DATA IN TERMS OF
PERCENTAGES
4.INCREASE OR DECREASE IN TERMS OF
PERCENTAGES
5. COMPARATIVE-STATEMENTS CAN
BE PREPARED IN TWO FORMS
Comparative – size
Statement
Comparative Comparative
Balance-sheet Income- statement
7. COMPARATIVE BALANCE
-SHEET
A COMPARATIVE BALANCE SHEET SHOWS THE BALANCES
OF ACCOUNTS (PERSONAL AND REAL) ON DIFFERENT
DATES & ALSO THE EXTENT 0F THEIR INCREASE OR
DECREASE BETWEEN THESE DATES THROWING LIGHT ON
TREND & DIRECTION OF CHANGE IN THE POSITION OVER
THE PERIOD. THIS ENABLES THE USER TO PREDICT THE
FUTURE POSITION OF THE BUSINESS. WHEN DATA OF
TRADING & PROFIT &LOSS ACCOUNT AND BALANCE
SHEET FOR A DEFINITE NUMBER OF CONSECUTIVE YEARS
ARE PUT IN ADJACENT COLOUMNS THEY ARE CALLED
COMPARATIVE FINANCIAL STATEMENTS.IN PREPARING
THESE STATEMENTS , THE ITEMS ARE PLACED IN ROWS
AND YEARS OR FIRMS ARE EXHIBITED IN THE COLOUMNS.
9. PARTICULARS PREVIOU CURREN INCREASE %CHANGE
S YEAR T-YEAR DECREAS (BASE 1ST
E YEAR )
A.FIXED ASSETS ---------------- ------------------- -------------------- --------------------
B.INVESTMENTS ---------------- -------------------- -------------------- --------------------
C.WORKING CAPITAL(CURRENT ASSETS-CURRENT
LIABILITIES ) ----------------- -------------------- -------------------- --------------------
------------- -------- -------- --------
D.CAPITAL EMPLOYED(A+B+C)
E.LESS LONG TERM
DEBTS(DEBENTURES,BONDS ETC )
-------- -------- -------- --------
SHAREHOLDERS FUND(D-E)
-------- -------- -------- --------
-------- -------- -------- --------
REPRESENTED BY :
1.EQUITY SHARE CAPITAL
-------- -------- -------- --------
2.PREFERENCE SHARE CAPITAL
•NET RESERVE & SURPLUS(AFTER
-------- -------- -------- --------
MISC.EXPENDITURE)
-------- -------- -------- --------
SHAREHOLDERS FUND
10. FORMULA FOR :
PERCENTAGE OF CHANGE (INCREASE OR DECREASE)=
INCREASE / DECREASE * 100
FIGURES OF PREVIOUS YEARS
EXAMPLE: SUPPOSE IN PREVIOUS BUILDING IS
RS.5,OO,OOO & IN CURRENT YEAR IT IS RS.600,000.THE
INCREASE IS RS.100,000
%AGE OF INCREASE = 100,000 *100
500,000
=20%
11. PREPARE COMPARATIVE BALANCE
SHEET OF ABC LTD.
PARTICULARS 2009 2010
RS RS
LIABILITIES: SHARE CAPITAL 40,000 70,000
RESERVE 12,000 10,000
LONG – TERM LOANS 50,000 50,000
TOTAL 1,02,000 1,30,000
ASSETS : FIXED ASSETS 80,000 1,02,000
SUNDRY DEBTORS 10,000 20,000
BANK BALANCE 12,000 8,000
TOTAL 1,02,000 1,30,000
12. COMPARATIVE BALANCE SHEET OF ABC LTD
AS ON 31ST DEC.2009&2010
PARTICULARS 2009 2010 ABSOLUTE %AGE
RS RS CHANGE CHANGE
A.TOTAL FIXED ASSETS 80,000 1,02,000 22,000 27.5
B.CURRENT ASSETS
• SUNDRY DEBTORS 10,000 20,000 10,000 100
• BANK BALANCE 12,000 8,000 (-) 4,000 (-) 33
TOTAL CURRENT ASSETS 22,000 28,000 6,000 27.28
C. TOTAL ASSETS ( A+B) 1,02,000 1,30,000 28,000 27.5
D. LONG TERM LOANS 50,000 50,000 NIL NIL
E.SHAREHOLDERS FUND (C-D) 52,000 80,000 28,000 53.85
TOTAL (D + E ) 1,02,000 1,30,000 28,000 27.5
REPRESENTED BY :
• SHARE CAPITAL 40,000 70,000 30,000 75
• RESERVE 12,000 10,000 (-) 2,000 (-)16.7
SHAREHOLDER FUND 52,000 80,000 28,000 53.85
14. COMPARATIVE INCOME STATEMENT
THE INCOME STATEMENT SHOWS THE NET
PROFIT OR NET LOSS DUE TO BUSINESS
OPERATIONS. A COMPARATIVE INCOME
STATEMENT SHOWS INCREASE OR
DECREASE IN ABSOLUTE FIGURES OF THE
INCOMES & EXPENSES. IT SHOWS THE
OPERATING RESULTS FOR A NUMBER OF
ACCOUNTING PERIODS SO THAT THE
CHANGES IN ABSOLUTE DATA IN TERMS OF
MONEY AND PERCENTAGE FROM ONE
PERIOD TO OTHER MAY BE STUDIED AND
ANALYZED.
15. WHILE STUDYING THE CHANGES SHOWN IN INCOME
STATEMENT ,THE FOLLOWING FACTORS SHOULD BE
CONSIDERED :-
1.CAUSES OF CHANGE IN SALES :-
•INCREASE / DECREASE IN QUANTITY OF GOODS SOLD
•CHANGE IN SELLING PRICE OF GOODS
•CHANGE IN QUANTITY SOLD AS WELL AS CHANGE IN
COST OF GOODS SOLD
2. CAUSES OF CHANGE IN COST OF GOODS SOLD :-
•CHANGE IN DIRECT EXPENSES
•CHANGE IN DIRECT PURCHASES
•CHANGE IN INVENTORY
3. CAUSES OF CHANGE IN GROSS PROFIT
•INCREASE / DECREASE IN SALES
•INCREASE / DECREASE IN DIRECT EXPENES
•INCREASE / DECREASE IN OPENING & CLOSING STOCK
•INCREASE / DECREASE IN PURCHASES
16. PURPOSE OF COMPARATIVE INCOME
STATEMENT
I.TO KNOW THE INCREASE / DECREASE IN SALES
II.TO KNOW THE INCREASE / DECREASE IN COST OF
GOODS SOLD
III.TO KNOW THE INCREASE / DECREASE IN GROSS PROFIT
IV.TO KNOW THE INCREASE / DECREASE IN OPERATING
EXPENSES
V.TO KNOW THE INCREASE / DECREASE IN OPERATING
PROFIT
VI.TO KNOW THE INCREASE / DECREASE IN NET PROFIT
18. PARTICULARS PREVIOUS CURRENT INCREASE/ %AGE
YEAR YEAR DECREASE
RS RS RS
NET SALES (I.E.AFTER RETURNS) ------- --------- ---------- ----
LESS : COST OF GOODS SOLD ------- --------- ---------- ----
GROSS PROFIT (A) -------- --------- ---------- ----
LESS : OPERATING EXPENSES
OFFICE & ADMINISTRATION ---------- -------- --------- ----
SELLING & DISTRIBUTION ---------- ---------- --------- ----
TOTAL OPERATING EXPENSES(B) ---------- ----------- ---------- ---
OPERATING PROFIT (A-B ) -------- -------- -------- ---
ADD: NON OPERATING PROFITS -------- -------- -------- ----
TOTAL PROFITS -------- -------- -------- ----
LESS: NON OPERATING --------- --------- -------- ---
EXPENSES
NET PROFIT BEFORE TAX -------- --------- -------- ---
LESS: TAX -------- --------- -------- ---
NET PROFIT AFTER TAX -------- -------- -------- ------
19. COST OF GOODS SOLD MEANS :-
OPENING STOCK
ADD: PURCHASES
LESS: RETURNS
DIRECT EXPENSES
LESS: CLOSING STOCK
2.OPERATING EXPENSES INCLUDES
RENT OF OFFICE , STATIONARY ,SALARIES TO STAFF , ADVERTISEMENT ,
SALESMAN , SALARIES & COMMISSION , DELIVERY VAN EXPENSES , BAD
DEBTS ETC.
3. NON – OPERATING INCOME INCLUDES
INSURANCE CLAIM RECEIVED , PROFIT FROM SALE OF ASSETS ,
GOVERNMENT SUBSIDY , DIVIDEND ON SHARES , INTEREST ON
SECURITIES
4.NON –OPERATING EXPENSE INCLUDES
LOSS ON SALE OF ASSETS , WRITING OFF GOODWILL , DISCOUNT ON SHARES
& DEBENTURES WRITTEN OFF
20. PREPARE A COMPARATIVE INCOME
STATEMENT OF ABC LTD
PARTICULARS 2009 2010
RS RS
SALES 4,00,000 5,00,000
COST OF GOODS SOLD 2,00,000 3,00,000
INDIRECT EXPENSES 75,000 1,00,000
PROVISION FOR TAX 50,000 65,000
21. COMPARATIVE INCOME STATEMENT FOR
THE YEAR 2009 & 2010
PARTICULARS 2009 2010 ABSOLUTE %AGE
RS RS CHANGE CHANGE
SALES 4,00,000 5,00,000 1,00,000 25
LESS: COST OF GOODS SOLD 2,00,000 3,00,000 1,00,000 50
GROSS PROFIT 2,00,000 2,00,000 NIL NIL
LESS:INDIRECT EXPENSES 75,000 1,00,000 25,000 33.33
NET PROFIT BEFORE TAX 1,25,000 1,00,000 (-)25000 (-)20
LESS:PROVISION FOR TAX 50,000 65,000 15,000 30
NET PROFIT AFTER TAX 75,000 35,000 (-)40,000 53.33
23. COMMON –SIZE STATEMENT
COMMON SIZE FINANCIAL STATEMENTS
ARE THOSE IN WHICH FIGURES REPORTED
ARE CONVERTED INTO PERCENTAGE TO
SOME COMMON BASE .FOR THIS
PURPOSE , ITEMS OF FINANCIAL
STATEMENT ARE CALCULATED AND
PRESENTED AS PERCENTAGE TO TO THE
TOTAL ITEMS. THUS A COMMON BASE FOR
COMPARISON IS PROVIDED.EACH
PERCENTAGE SHOWS THE RELATION OF
THE INDIVIDUAL ITEM TO THE RESPECTIVE
TOTAL.
26. COMMON SIZE BALANCE
SHEET
IN THIS STATEMENT THE TOTAL OF BALANCE
SHEET IS TAKEN AS 100 & ALL FIGURES ARE
EXPRESSED AS PERCENTAGE OF TOTAL.
COMPARATIVE COMMON SIZE BALANCE SHEET
FOR DIFFERENT PERIODS HELP TO HIGHLIGHT
THE TRENDS IN DIFFERENT ITEMS OF THE
BALANCE SHEET FOR E.G. EACH ITEM OF
ASSET AS A PERCENTAGE OF TOTAL
ASSET .AND,EACH LIABILITY AS A
PERCENTAGE OF TOTAL LIABILTY
27. OBJECTIVE OF COMMON
SIZE BALANCE SHEET
1. TO STUDY THE CHANGES
IN INDIVIDUAL ITEM OF
BALANCE SHEET
2. TO STUDY THE TREND
OF DIFFERENT ITEMS OF
ASSETS & LIABILITIES
30. PREPARE A COMMON SIZE BALANCE SHEET FOR A LTD
& B LTD
LABILITIES A LTD. B LTD. ASSETS A LTD. B LTD
RS RS RS RS
SHARE CAPITAL 3,00,000 4,00,000 FIXED 4,00,000 4,00,000
ASSETS
RESERVES & 2,00,000 3,00,000 CURRENT 2,00,000 3,50,000
SURPLUS ASSETS
CURRENT 1,00,000 50,000
LIABILITIES
TOTAL 6,00,000 7,50,000 6,00,000 7,50,000
31. PARTICULARS A LTD. A LTD. B LTD. B LTD
AMOUNT %AGE OF AMOUNT %AGE
RS TOTAL RS OF
TOAL
ASSETS:-
1.FIXED ASSETS 4,00,000 66.67 4,00,000 53.33
2.CURRENT ASETS 2,00,000 33.33 3,50,000 46.67
TOTAL 6,00,000 100 7,50,000 100
LIABILITIES :
SHARE CAPITAL 3,00,000 50 4,00,000 53.33
RESERVES & SURPLUS 2,00,000 33.33 3,00,000 40
CURRENT LIABILITIES 1,00,000 16.67 50,000 6.67
TOTAL 6,00,000 100 7,50,000 100
33. COMMON – SIZE INCOME
STATEMENT
IN THIS STATEMENT ‘SALES’ARE
ASSUMED TO BE EQUAL TO 100 &
ALL FIGURES OF COST & EXPENSES
ARE EXPRESSED AS A PERCENTAGE
OF SALES. COMMON-SIZE INCOME
STATEMENT FOR DIFFERENT
PERIODS HELP TO REVEAL THE
EFFICIENCY.IF PREPARED FOR TWO
FIRMS IT CAN THROW LIGHT ON
RELATIVE EFFICIENCY OF EACH
ITEM OF COST OF TWO FIRMS
34. OBJECTIVE OF COMMON
SIZE STATEMENT
• TO STUDY THE CHANGE IN
INDIVIDUAL ITEMS OF INCOME
STATEMENT.
• TO STUDY THE TREND IN
DIFFERENT ITEMS OF INCOME
& EXPENSES.
