Comparitive and common size

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Comparitive and common size

  1. 1. PRESENTATION ONCOMPARATIVE STATEMENT & COMMON SIZE STATEMENT
  2. 2. COMPARATIVE STATEMENT
  3. 3. COMPARATIVE STATEMENT THE COMPARATIVE FINANCIAL STATEMENTS ARESTATEMENTS OF THE FINANCIAL POSITION ATDIFFERENT PERIODS; OF TIME . THE ELEMENTSOF FINANCIAL POSITION ARE SHOWN IN ACOMPARATIVE FORM SO AS TO GIVE AN IDEA OFFINANCIAL POSITION AT TWO OR MORE PERIODS .ANY STATEMENT PREPARED IN A COMPARATIVEFORM WILL BE COVERED IN COMAPARATIVESTATEMENTS. FROM PRACTICAL POINT OF VIEW ,GENERALLY TWO FINANCIAL STATEMENTS( BALANCE SHEET AND INCOME STATEMENT)AREPREPARED COMPARATIVE FORM FOR FINANCIALANALYSIS PURPOSES.
  4. 4. NOT ONLY THE COMPARISON OF THE TWOFIGURES OF TWO PERIODS BUT ALSO BERELATIONSHIP BETWEEN BALANCE- SHEETAND INCOME STATEMENT ENABLES AS INDEPTH STUDY OF THE FINANCIAL POSITIONAND OPERATIVE RESULTS.THECOMPARATIVE STATEMENT MAY SHOW:1.ABSOLUTE FIGURES (RUPEE AMOUNTS )2.CHANGES IN ABSOLUTE FIGURES I.E.INCREASE OR DECREASE IN ABSOLUTEFIGURES3.ABSOLUTE DATA IN TERMS OFPERCENTAGES4.INCREASE OR DECREASE IN TERMS OFPERCENTAGES
  5. 5. COMPARATIVE-STATEMENTS CAN BE PREPARED IN TWO FORMS Comparative – size Statement Comparative Comparative Balance-sheet Income- statement
  6. 6. COMPARATIVEBALANCE SHEET
  7. 7. COMPARATIVE BALANCE -SHEETA COMPARATIVE BALANCE SHEET SHOWS THE BALANCESOF ACCOUNTS (PERSONAL AND REAL) ON DIFFERENTDATES & ALSO THE EXTENT 0F THEIR INCREASE ORDECREASE BETWEEN THESE DATES THROWING LIGHT ONTREND & DIRECTION OF CHANGE IN THE POSITION OVERTHE PERIOD. THIS ENABLES THE USER TO PREDICT THEFUTURE POSITION OF THE BUSINESS. WHEN DATA OFTRADING & PROFIT &LOSS ACCOUNT AND BALANCESHEET FOR A DEFINITE NUMBER OF CONSECUTIVE YEARSARE PUT IN ADJACENT COLOUMNS THEY ARE CALLEDCOMPARATIVE FINANCIAL STATEMENTS.IN PREPARINGTHESE STATEMENTS , THE ITEMS ARE PLACED IN ROWSAND YEARS OR FIRMS ARE EXHIBITED IN THE COLOUMNS.
  8. 8. FORMAT OFCOMPARATIVE-BALANCE SHEET
  9. 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-CURRENTLIABILITIES ) ----------------- -------------------- -------------------- -------------------- ------------- -------- -------- --------D.CAPITAL EMPLOYED(A+B+C)E.LESS LONG TERMDEBTS(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. 10. FORMULA FOR :PERCENTAGE OF CHANGE (INCREASE OR DECREASE)= INCREASE / DECREASE * 100FIGURES OF PREVIOUS YEARSEXAMPLE: SUPPOSE IN PREVIOUS BUILDING ISRS.5,OO,OOO & IN CURRENT YEAR IT IS RS.600,000.THEINCREASE IS RS.100,000%AGE OF INCREASE = 100,000 *100 500,000 =20%
  11. 11. PREPARE COMPARATIVE BALANCE SHEET OF ABC LTD.PARTICULARS 2009 2010 RS RSLIABILITIES: SHARE CAPITAL 40,000 70,000 RESERVE 12,000 10,000 LONG – TERM LOANS 50,000 50,000 TOTAL 1,02,000 1,30,000ASSETS : 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. 12. COMPARATIVE BALANCE SHEET OF ABC LTD AS ON 31ST DEC.2009&2010PARTICULARS 2009 2010 ABSOLUTE %AGE RS RS CHANGE CHANGEA.TOTAL FIXED ASSETS 80,000 1,02,000 22,000 27.5B.CURRENT ASSETS• SUNDRY DEBTORS 10,000 20,000 10,000 100• BANK BALANCE 12,000 8,000 (-) 4,000 (-) 33TOTAL CURRENT ASSETS 22,000 28,000 6,000 27.28C. TOTAL ASSETS ( A+B) 1,02,000 1,30,000 28,000 27.5D. LONG TERM LOANS 50,000 50,000 NIL NILE.SHAREHOLDERS FUND (C-D) 52,000 80,000 28,000 53.85 TOTAL (D + E ) 1,02,000 1,30,000 28,000 27.5REPRESENTED BY :• SHARE CAPITAL 40,000 70,000 30,000 75• RESERVE 12,000 10,000 (-) 2,000 (-)16.7SHAREHOLDER FUND 52,000 80,000 28,000 53.85
  13. 13. COMPARATIVE INCOME STATEMENT
  14. 14. COMPARATIVE INCOME STATEMENT THE INCOME STATEMENT SHOWS THE NETPROFIT OR NET LOSS DUE TO BUSINESSOPERATIONS. A COMPARATIVE INCOMESTATEMENT SHOWS INCREASE ORDECREASE IN ABSOLUTE FIGURES OF THEINCOMES & EXPENSES. IT SHOWS THEOPERATING RESULTS FOR A NUMBER OFACCOUNTING PERIODS SO THAT THECHANGES IN ABSOLUTE DATA IN TERMS OFMONEY AND PERCENTAGE FROM ONEPERIOD TO OTHER MAY BE STUDIED ANDANALYZED.
  15. 15. WHILE STUDYING THE CHANGES SHOWN IN INCOMESTATEMENT ,THE FOLLOWING FACTORS SHOULD BECONSIDERED :-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 INCOST 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. 16. PURPOSE OF COMPARATIVE INCOME STATEMENT I.TO KNOW THE INCREASE / DECREASE IN SALES II.TO KNOW THE INCREASE / DECREASE IN COST OF GOODS SOLDIII.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
  17. 17. FORMAT OFCOMPARATIVEINCOMESTATEMENT
  18. 18. PARTICULARS PREVIOUS CURRENT INCREASE/ %AGE YEAR YEAR DECREASE RS RS RSNET 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 --------- --------- -------- --- EXPENSESNET PROFIT BEFORE TAX -------- --------- -------- ---LESS: TAX -------- --------- -------- ---NET PROFIT AFTER TAX -------- -------- -------- ------
  19. 19. COST OF GOODS SOLD MEANS :-OPENING STOCKADD: PURCHASES LESS: RETURNSDIRECT EXPENSESLESS: CLOSING STOCK2.OPERATING EXPENSES INCLUDESRENT OF OFFICE , STATIONARY ,SALARIES TO STAFF , ADVERTISEMENT , SALESMAN , SALARIES & COMMISSION , DELIVERY VAN EXPENSES , BAD DEBTS ETC.3. NON – OPERATING INCOME INCLUDESINSURANCE CLAIM RECEIVED , PROFIT FROM SALE OF ASSETS , GOVERNMENT SUBSIDY , DIVIDEND ON SHARES , INTEREST ON SECURITIES4.NON –OPERATING EXPENSE INCLUDESLOSS ON SALE OF ASSETS , WRITING OFF GOODWILL , DISCOUNT ON SHARES & DEBENTURES WRITTEN OFF
  20. 20. PREPARE A COMPARATIVE INCOME STATEMENT OF ABC LTDPARTICULARS 2009 2010 RS RSSALES 4,00,000 5,00,000COST OF GOODS SOLD 2,00,000 3,00,000INDIRECT EXPENSES 75,000 1,00,000PROVISION FOR TAX 50,000 65,000
  21. 21. COMPARATIVE INCOME STATEMENT FOR THE YEAR 2009 & 2010PARTICULARS 2009 2010 ABSOLUTE %AGE RS RS CHANGE CHANGESALES 4,00,000 5,00,000 1,00,000 25LESS: COST OF GOODS SOLD 2,00,000 3,00,000 1,00,000 50GROSS PROFIT 2,00,000 2,00,000 NIL NILLESS:INDIRECT EXPENSES 75,000 1,00,000 25,000 33.33NET PROFIT BEFORE TAX 1,25,000 1,00,000 (-)25000 (-)20LESS:PROVISION FOR TAX 50,000 65,000 15,000 30NET PROFIT AFTER TAX 75,000 35,000 (-)40,000 53.33
  22. 22. COMMON –SIZE STATEMENT
  23. 23. COMMON –SIZE STATEMENTCOMMON SIZE FINANCIAL STATEMENTSARE THOSE IN WHICH FIGURES REPORTEDARE CONVERTED INTO PERCENTAGE TOSOME COMMON BASE .FOR THISPURPOSE , ITEMS OF FINANCIALSTATEMENT ARE CALCULATED ANDPRESENTED AS PERCENTAGE TO TO THETOTAL ITEMS. THUS A COMMON BASE FORCOMPARISON IS PROVIDED.EACHPERCENTAGE SHOWS THE RELATION OFTHE INDIVIDUAL ITEM TO THE RESPECTIVETOTAL.
  24. 24. COMMON SIZE STATEMENT CAN BE PREPARED IN 2 FORMS
  25. 25. COMMON SIZE BALANCE SHEET
  26. 26. COMMON SIZE BALANCE SHEETIN THIS STATEMENT THE TOTAL OF BALANCESHEET IS TAKEN AS 100 & ALL FIGURES AREEXPRESSED AS PERCENTAGE OF TOTAL.COMPARATIVE COMMON SIZE BALANCE SHEETFOR DIFFERENT PERIODS HELP TO HIGHLIGHTTHE TRENDS IN DIFFERENT ITEMS OF THEBALANCE SHEET FOR E.G. EACH ITEM OFASSET AS A PERCENTAGE OF TOTALASSET .AND,EACH LIABILITY AS APERCENTAGE OF TOTAL LIABILTY
  27. 27. OBJECTIVE OF COMMON SIZE BALANCE SHEET1. TO STUDY THE CHANGES IN INDIVIDUAL ITEM OF BALANCE SHEET2. TO STUDY THE TREND OF DIFFERENT ITEMS OF ASSETS & LIABILITIES
  28. 28. FORMAT OFCOMMON - SIZE BALANCE SHEET
  29. 29. PARTICULARS ABSOLUTE ABSOLUTE %AGE %AGE AMOUNT AMOUNT 2009 2010 2009 2010 RSASSETS:1.FIXED ASSETS ---------- ---------- --------- --------2.INVESTMENTS ---------- ---------- --------- --------3.CURRENT ASSETS ---------- ---------- --------- --------TOTAL ASSETS ---------- ----------- --------- ---------LIABILITIES:1.EQUITY SHARE CAPITAL ---------- --------- --------- -------2.PREFERENCE SHARE ----------- --------- --------- --------CAPITAL ---------- ---------- -------- --------3.RESERVE & SURPLUS ---------- ----------- -------- --------4.SECURED LOANS ---------- ---------- ------- -------5.UNSECURED LOANS --------- ---------- -------- ------6.CURRENT LIABILITIES ---------- --------- ------- --------7.PROVISIONCAPITAL & LIABILITIES ---------- --------- -------- --------
  30. 30. PREPARE A COMMON SIZE BALANCE SHEET FOR A LTD & B LTDLABILITIES A LTD. B LTD. ASSETS A LTD. B LTD RS RS RS RSSHARE CAPITAL 3,00,000 4,00,000 FIXED 4,00,000 4,00,000 ASSETSRESERVES & 2,00,000 3,00,000 CURRENT 2,00,000 3,50,000SURPLUS ASSETSCURRENT 1,00,000 50,000LIABILITIESTOTAL 6,00,000 7,50,000 6,00,000 7,50,000
  31. 31. PARTICULARS A LTD. A LTD. B LTD. B LTD AMOUNT %AGE OF AMOUNT %AGE RS TOTAL RS OF TOALASSETS:-1.FIXED ASSETS 4,00,000 66.67 4,00,000 53.332.CURRENT ASETS 2,00,000 33.33 3,50,000 46.67TOTAL 6,00,000 100 7,50,000 100LIABILITIES :SHARE CAPITAL 3,00,000 50 4,00,000 53.33RESERVES & SURPLUS 2,00,000 33.33 3,00,000 40CURRENT LIABILITIES 1,00,000 16.67 50,000 6.67TOTAL 6,00,000 100 7,50,000 100
  32. 32. COMMON SIZE INCOMESTATEMENT
  33. 33. COMMON – SIZE INCOME STATEMENTIN THIS STATEMENT ‘SALES’AREASSUMED TO BE EQUAL TO 100 &ALL FIGURES OF COST & EXPENSESARE EXPRESSED AS A PERCENTAGEOF SALES. COMMON-SIZE INCOMESTATEMENT FOR DIFFERENTPERIODS HELP TO REVEAL THEEFFICIENCY.IF PREPARED FOR TWOFIRMS IT CAN THROW LIGHT ONRELATIVE EFFICIENCY OF EACHITEM OF COST OF TWO FIRMS
  34. 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.
  35. 35. FORMAT OFCOMMON SIZE INCOME STATEMENT
  36. 36. PARTICULARS AMT. 2009 RS. AMT. 2010 RS. %AGE 2009 %AGE 2010A.GROSS SALESB.LESS: RETURN --------- ---------- T ----------- ----------- ------ ------ ------ ------C. NET SALES (A-B) --------- ---------- ------ ------D.LESS COST OF GOODS SOLD -------- --------- --------- ---------E. GROSS PROFIT (C-D) --------- --------- --------- ---------F.LESS : OPERATING EXPENSES•OFFICE & ADMINISTRATION•SELING & DISTRIBUTION --------- --------- --------- --------- --------- --------- --------- ---------G. OPERATING INCOME (E-F) -------- --------- --------- ---------H.ADD NON-OPERATING INCOME --------- --------- --------- ---------I.LESS NON OPERATING EXPENSES --------- --------- --------- ---------J.NET INCOME BEFORE TAX --------- --------- --------- ---------K.LESS TAX --------- --------- --------- ---------L.NET INCOME AFTER TAX --------- --------- --------- ---------
  37. 37. PREPARE A COMMON SIZE INCOME STATEMENTPARTICULARS 2009 2010 AMOUNT AMOUNT RS RSSALES 8,00,000 9,00,000COST OF GOODS 5,00,000 5,75,000SOLDOFFICE & 50,000 60,000ADMINISTRATIVEEXPENSESSELLING & 25,000 35,000DISTRIBUTIONEXPENSESINTEREST ON LOAN 20,000 25,000INCOME TAX 15,000 20,000
  38. 38. COMMON SIZE INCOME STATEMENTPARTICULARS 2009 2009 2010 2010 AMOUNT %AGE AMOUNT %AGE RS RSSALES 8,00,000 100 9,00,000 100LESS:COST OF GOODS SOLD 5,00,000 62.50 5,75,000 63.88GROSS PROFIT 3,00,000 37.50 3,25,000 36.12LESS: OPERATING EXPENSES1. OFFICE &ADMINISTARTIVE EXPENSES 50,000 6.25 60,000 6.672.SELLING & DISTRIBUTIONEXPENSES 25,000 3.12 35,000 3.8OPERATING PROFIT 2,25,000 28.13 2,30,000 25.57LESS:INTEREST ON LOAN 20,000 2.50 25,000 2.77PROFIT BEFORE TAX 2,05,000 25.63 2,05,000 22.80LESS: INCOME TAX 15,000 1.87 20,000 2.2NET PROFIT 1,90,000 23.76 1,85,000 20.58
  39. 39. THANK YOU !!!!

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