INTRODUCTION

Comparative statements: When financial statements figures for two or

more years are placed side by side to facilitate comparison, these are called
‘comparative financial statements’. Such statements not only show the absolute
figures of various various years but also provide for columns to increase or
decrease in these figures from one year to another.

Analysts, investors, and business managers use a company’s income statement,

balance sheet, and cash flow statement for comparative purposes. They want to see
how much is spent chasing revenues from one period to the next and how items on
the balance sheet and the movements of cash vary over time.

Importance of comparative statements:

● The main aim of comparative statements is to put the data for a number of years
in simpler and comparable form.

● Comparative financial statements indicate the trend of change by putting the

figures for a number of years side by side.

● Comparison of financial statements for a number of years may also indicate the
strong points and weak points of the firm.

● Comparative statements help a business unit to compare its performance with the
average performance of the industry.

● Comparative financial statements help in forecasting the profitability and

financial soundness of the business.Comparative balance sheet: The comparative
balance sheet shows increases and decreases in the various assets, liabilities and in
capital.
Advantages of comparative balance sheet:
● Comparative balance sheet shows not only the balances of accounts on different
dates but also the extent of increase and decrease in various items of the balance
sheet.
● In a single year’s balance sheet the focus is on status, whereas in comparative
balance sheet emphasis is on change.
● A comparative balance sheet may be used to study the trends in business
concern.
● The comparative balance sheet is a connecting link between the statement of
profit and loss and the balance sheet, because the statement of profit and loss
presents the result of operating activities of a business, whereas the comparative
balance sheet shows the effect of operating activities on its assets, liabilities and
capital

Common size statements: Common size statements are those in which

individual figures are converted into percentages to some common base. This
analysis is called vertical analysis since each accounting variable is analysed
vertically.

Common size financial statements help to analyze and compare a company's

performance over several periods with varying sales figures. The common size
percentages can be subsequently compared to those of competitors to determine
how the company is performing relative to the industry.

Importance of common size statements:

● Common size statements present the change in various items in relation to
revenue from operations, total assets or total liabilities.

● Over a period of time, a relationship is established between various items of the

statement of profit and loss to revenue from operations and various items of
balance sheet to total assets or total liabilities.

● Common size statements provide a common base for comparison. Common size
balance sheet: A common size balance sheet is a balance sheet that displays both
the numeric value and relative percentage for total assets, total liabilities, and
equity accounts.

Purpose of common size balance sheet:

● To analyse changes in individual items of balance sheet

● To establish the trend in various items of assets and liabilities

● To judge the relative financial soundness for different enterprises belonging to

the same industry by preparing their common size balance sheets for different
periods.

● To assess the financial strategy adopted by different enterprises belonging to the

same industry.

Chart of Difference between Comparative and Common Size

Statement: –

Basis of Difference Comparative Common Size

Meaning The comparative The Common-Size
statements are that statement is that
statement which shows statement which shows
the comparison between the percentage to a
the component of the common base of all
financial statement of the accounts of the financial
business for the period of statement of the business
more the two years for the period of more
than two years.
Base of Comparison In this, the value of the In this, the value of the
basis year compared with current year compared
the value of the current with the current year.
year.
Number of Years Minimum Financial A financial Statement of
 required Statements of two years One year is required.
are required.
Results expressed in The results are expressed The results are expressed
in the pictorial as well as in the percentage form.
percentage form.
Type of Comparison It included both types of It included only inter-
included Intra and inter-firm firm comparison.
comparison.
Helps in It helps in the decision It helps the stakeholder in
making for the the decision of the
management for future investment.
planning.
Useful in It is useful to compare the It is useful to compare the
current year results with current year results with
the previous year. its competitors’ results.
 Comparative Balance sheet As at 31st march 2020 and 2019

Particulars Note March March Absolute %

no. 2020 2019 change increase/
decrease
1. Equity and liabilities
-Shareholder’s Funds
a)Share Capital 97.12 97.11 0.01 0.01%
b)Reserves and Surplus 2,563.01 2,346.70 216.31 9.21%
c)Non-controlling Interest 7.11 3.45 3.66 106%

-Non-current liabilities
a))Long term borrowings 462.76 447.75 15.01 3.35%
b))Long term provisions 9.87 6.69 3.18 47.5%
c)Deferred Tax liabilities 53.76 87.81 (34.05) (38.77%)
e)Other Non-current liabilities 4.79 3.85 0.94 24.4%

-Current liabilities
a)Short term borrowings 334.5 285.01 49.49 16.3%
b)Trade Payables 1,065.81 999.33 66.48 6.65%
c)Other Current Liabilities 64.17 60.12 4.05 6.73%
d) Provisions 46.35 31.97 14.38 44.9%
e)Other Financial liabilities 192.22 193.30 (1.08) (0.55%)
f)Current Tax liabilities 3.54 3.63 (0.09) (2.47%)

Total 4,905.01 4,566.99 338.29 7.4%

2. Assets
-Non-Current Assets
a)Proprietary plant and 1,320.82 1,037.07 283.75 27.3%
equipment
b)Capital work-in-progress 178.49 169.89 8.6 5.06%
c)Goodwill 278.96 269.25 9.71 3.6%
d)Other Intangible Assets 7.99 8.10 (0.11) (1.35%)
e)Right to use asset 307.80 268.25 39.55 14.7%
f)Investments in joint ventures 135.82 144.12 (8.3) (5.75%)
g)Financial Assets 21.54 22.59 (1.05) (4.64%)
h)Deferred Tax Assets[net] 5.51 10.32 (4.81) (46.6%)
i)Income Tax Assets[net] 33.96 20.37 13.59 66.7%
j)Other non-current assets 27.67 34.46 (6.79) (19.7%)
-Current Assets
a)Inventories 1,278.46 1233.53 44.93 3.64%
b)Financial Assets 1,131.26 1,171.88 (40.62) (3.46%)
c)Other Currents Assets 176.63 177.18 (0.55) (0.31%)

Total 4,905.01 4,566.99 337.9 7.39%

Findings:
Working capital for the year 2020 = current assets-current liabilities

= 2,586.35-1,706.59
= 879.76

Working capital for the year 2019 = current assets-current liabilities

= 2,582.59-1,573.36
= 1,009.23

● In both the years current assets have exceeded the current liabilities. However,
the working capital has decreased in the year 2020 as compared to the year 2019.
● The financial assets have decreased in the year 2020 as compared to the year
2019. However non-current assets have increased in the year 2020 as compared to
2019.
● Inventories have increased in the year 2020.
● Fixed assets such as capital work in progress have increased whereas intangible
assets have decreased.
● The long term borrowings have increased in the year 2020.
● The share capital of the company has not changed.
● Reserves and surplus have increased in the year 2020.

Comparative income statement as at 31st march 2020 and 2019

 Particulars Note 2020 2019 Absolute %
no. change increase/
decrease
Revenue from 6,365.82 6,061.86 303.96 5.01%
operations
Other income 68.52 60.03 8.49 14.14%
Total income 6,434.34 6,121.89 312.45 50.2%
Total expense 5,542.88 5,355.83 187.05 3.49%
Profit before tax 883.16 766.06 117.1 15.28%
Less tax 227.06 271.27 (44.21) (16.29%)
Profit after tax 656.10 493.89 162.21 32.84%

Findings:
● Rfo of the company has increased in the year 2020.
● Other incomes of the company have increased as well in the year 2020.
● The expenses of the company have increased.
● The earnings before tax have increased in the year 2020
● The earnings after tax have increased as well in the year 2020

Common size balance sheet as at 31st march 2020 and 2019

 Particulars Note Absolute amounts % of balance sheet total
no.
2020 2019 2020 2019
1. Equity and liabilities
-Shareholder’s Funds
a)Share Capital 97.12 97.11 1.97% 2.12%
b)Reserves and Surplus 2,563.01 2,346.70 52.25% 51.3%
c)Non-controlling 7.11 3.45 0.14% 0.07%
Interest

-Non-current liabilities
a))Long term borrowings 462.76 447.75 9.43% 9.80%
b))Long term provisions 9.87 6.69 0.20% 0.14%
c)Deferred Tax liabilities 53.76 87.81 1.09% 1.92%
e)Other Non-current 4.79 3.85 0.09% 0.08%
liabilities

-Current liabilities
a)Short term borrowings 334.5 285.01 6.81% 6.24%
b)Trade Payables 1,065.81 999.33 21.7% 21.88%
c)Other Current 64.17 60.12 1.30% 1.31%
Liabilities
d) Provisions 46.35 31.97 0.94% 0.70%
e)Other Financial 192.22 193.30 3.91% 4.23%
liabilities
f)Current Tax liabilities 3.54 3.63 0.07% 0.07%

Total 4,905.01 4,566.99 100 100

2. Assets
-Non-Current Assets
a)Proprietary plant and 1,320.82 1,037.07 26.92% 22.7%
equipment
b)Capital work-in- 178.49 169.89 3.63% 3.71%
progress
c)Goodwill 278.96 269.25 5.68% 5.89%
d)Other Intangible Assets 7.99 8.10 0.16% 0.17%
e)Right to use asset 307.80 268.25 6.27% 5.87%
f)Investments in joint 135.82 144.12 2.76% 3.15%
ventures
g)Financial Assets 21.54 22.59 0.43% 0.49%
h)Deferred Tax 5.51 10.32 0.11% 0.22%
Assets[net]
i)Income Tax Assets[net] 33.96 20.37 0.69% 0.44%
j)Other non-current 27.67 34.46 0.56% 0.75%
assets
-Current Assets
a)Inventories 1,278.46 1233.53 26.06% 27.00%
b)Financial Assets 1,131.26 1,171.88 23.06% 25.65%
c)Other Currents Assets 176.63 177.18 3.6% 3.87%

Total 4,905.01 4,566.99 100 100

Findings:
● The percentage of share capital has decreased in the year 2020 as compared to
2019.
● The percentage of current assets have reduced similarly the percentage of current
liabilities have reduced.
● The percentage of non current assets have reduced in the year 2020 as compared
to 2019.

Common size income statement as at 31st march 2020 and 2019

 Particulars Note Absolute amounts % of revenue from
no. operations
2020 2019 2020 2019
Revenue from operations 6,365.82 6,061.86 100 100
Other income 68.52 60.03 1.06% 0.98%
Total income 6,434.34 6,121.89
Total expense 5,542.88 5,355.83 86.14 87.4%
Profit before tax 883.16 766.06 12.94% 12.51%
Less tax 227.06 271.27 3.52% 4.42%
Profit after tax 656.10 493.89 10.19% 8.06%

Findings:
● Percentage of rfo remains 100 for both the years.
● Percentage of income has increased in the year 2020 as compared to 2019.
● Percentage of expenses have reduced from 87.4% in 2020 to 86.14% in 2019.
● The net profit after tax has increased in the year 2020 as compared to the year
2019.