Common Size Balance Sheet A common size balance sheet shows the percentage in relation to each item of assets to total assets and each item of liabilities to total liabilities and capital. A comparative common size balance sheet for different periods helps to understand the trends and reasons for changes in different items.

1. MANAGEMENTACCOUNTING
FinancialAnalysis and Interpretation :
Common Size Financial StatementAnalysis
Problems 1
By:
Smt.UMA MINAJIGI REUR
HEAD, DEPT. OF COMMERCE & Management
Smt. V G Degree College for Women, Kalaburagi

2. MANAGEMENT
ACCOUNTING
B.COM SIXTH SEMESTER
&
BBA FOURTH SEMESTER
6.3: PRINCIPLES OF MANAGEMENT ACCOUNTING

3. Unit II : Financial Statements :
• Nature, uses and limitations.
• Analysis and interpretations – meaning,
procedure, objectives, and importance.
• Comparative statement,
• Common Size Statements and
• Trend Analysis - practical problems.

4. MANAGEMENTACCOUNTING
FinancialAnalysis and Interpretation :
Comparative Financial StatementAnalysis
Common Size Statement of
Assets & Liabilities --
Solved Problems

5. Common Size
Financial
Statement
Analysis
Common Size Financial Statements
 When the financial statement, financial data are shown in the shape of
vertical percentage are known as Common Size Statements. In these
statements, all figures are converted into a common unit by expressing
them as percentage of a key figures in the statement.
 The figures are shown as percentage of total assets, total liabilities and
total sales. The analyst is able to assess the figures in relation to total
values.

6. Common Size
Financial
Statement
Analysis
Common size statements may be prepared in the following way:
1. Total assets or liabilities are taken as 100.
2. Individual assets are expressed as percentage of total assets i.e, 100 and
different liabilities are calculated in relation to total liabilities.
Common Size Statements are those statements in which figures reported for
the period are converted into percentage or ratios of a total item.
Types of Common Size Statements
1. Common Size Income Statement
2. Common Size Balance Sheet.

7. Common Size
Income
Statement
Analysis
Common Size Income Statement
 In common Size income statement, the sales figures are taken to be 100%
and all other items of cost of goods sold or cost of sales are expressed as a
percentage of sales.
 A comparative common size income statement for two or more periods
helps to ascertain the efficiency.

8. Common Size
Balance Sheet
Common Size Balance Sheet
 A common size balance sheet shows the percentage in relation to each item
of assets to total assets and each item of liabilities to total liabilities and
capital.
 A comparative common size balance sheet for different periods helps to
understand the trends and reasons for changes in different items.

9. Common Size
Balance Sheet
Common Size Statement of Assets &
Liabilities
Solved Problems

10. Format:
Comparative Statement of Assets & Liabilities
Particulars 31-12-2019 31-12-2020
Amount Percentage Amount Percentage
I. Equity & Liabilities
1. Shareholders fund
Share Capital 6,00,000 8,00,000
Reserves & Surplus 1,40,000 2,36,000
Total Shareholders funds (A) 7,40,000 10,36,000
2. Non-Current Liabilities
Long Term Borrowings 3,00,000 2,00,000
Total Non-Current Liabilities (B) 3,00,000 2,00,000
3. Current Liabilities
Trade Payables 1,50,000 1,98,000
Short Term provisions 1,64,000 2,00,000
Total Current Liabilities (C) 3,14,000 3,98,000
Total (A+B+C) 13,54,000 100 16,34,000 100
II. Assets
1. Non-Current Assets
a. Fixed Assets
Tangible Assets 5,60,000 7,40,000
Intangible Assets 2,30,000 1,80,000
Total Non-Current Assets (D) 7,90,000 9,20,000
2. Current Assets
Inventories 1,54,000 2,18,000
Trade receivables 3,60,000 4,60,000
Cash & Cash Equivalents 50,000 36,000
Total Current Assets (E) 5,64,000 7,14,000
Total Assets (D+E) 13,54,000 100 16,34,000 100

11. Illustration 1:
The following are the statement of Assets and Liabilities of a concern as on 31-12-2019 and 2020.
Particulars 31-12-2019 31-12-2020
Amount Amount Amount Amount
I. Equity & Liabilities
1. Shareholders fund
Share Capital 6,00,000 8,00,000
Reserves & Surplus 1,40,000 7,40,000 2,36,000 10,36,000
2. Non-Current Liabilities
Long Term Borrowings 3,00,000 2,00,000
3. Current Liabilities
Trade Payables 1,50,000 1,98,000
Short Term provisions 1,64,000 3,14,000 2,00,000 3,98,000
Total 13,54,000 16,34,000
II. Assets
1. Non-Current Assets
a. Fixed Assets
Tangible Assets 5,60,000 7,40,000
Intangible Assets 2,30,000 7,90,000 1,80,000 9,20,000
2. Current Assets
Inventories 1,54,000 2,18,000
Trade receivables 3,60,000 4,60,000
Cash & Cash Equivalents 50,000 5,64,000 36,000 7,14,000

12. Notes to Accounts
Particulars 31-12-2019 31-12-2020
Amount Amount
Note 1: Share Capital 6,00,000 8,00,000
Share Capital 6,00,000 8,00,000
Note 2: Reserves & Surplus
General Reserves 80,000 1,40,000
Profit & Loss 60,000 96,000
Reserves & Surplus 1,40,000 2,36,000
Note 3: Long Term Borrowings
6% Debentures 3,00,000 2,00,000
Long Term Borrowings 3,00,000 2,00,000
Note 4: Trade Payable
Sundry Creditors 1,10,000 1,66,000
Bills Payable 40,000 32,000
Trade Payable 1,50,000 1,98,000
Note 5: Short Term Provisions
Provision for Taxation 80,000 1,00,000
Proposed Dividend 84,000 1,00,000
Short Term Provisions 1,64,000 2,00,000

13. Particulars 31-12-2019 31-12-2020
Amount Amount
Note 6: Tangible Assets
Machinery 1,60,000 4,00,000
Building 4,00,000 3,40,000
Tangible Assets 5,60,000 7,40,000
Note 7: Intangible Assets
Goodwill 2,30,000 1,80,000
Intangible Assets 2,30,000 1,80,000
Note 8: Inventories
Stock 1,54,000 2,18,000
Inventories 1,54,000 2,18,000
Note 9: Trade Receivables
Sundry Debtors 3,20,000 4,00,000
Bills Receivables 40,000 60,000
Trade Receivables 3,60,000 4,60,000
Note 10: Cash & Cash Equivalents
Cash 50,000 36,000
Cash & Cash Equivalents 50,000 36,000
Prepare a Common Size Statement of Assets & Liabilities of the concern and comment on the financial position of the
company.

14. Solution:
Common Size Statement of Assets & Liabilities
Particulars 31-12-2019 31-12-2020
Amount Percentage Amount Percentage

15. Solution:
Common Size Statement of Assets & Liabilities
Particulars 31-12-2019 31-12-2020
Amount Percentage Amount Percentage
I. Equity & Liabilities
1. Shareholders fund
Share Capital 6,00,000 8,00,000
Reserves & Surplus 1,40,000 2,36,000
Total Shareholders funds (A) 7,40,000 10,36,000
2. Non-Current Liabilities
Long Term Borrowings 3,00,000 2,00,000
Total Non-Current Liabilities (B) 3,00,000 2,00,000
3. Current Liabilities
Trade Payables 1,50,000 1,98,000
Short Term provisions 1,64,000 2,00,000
Total Current Liabilities (C) 3,14,000 3,98,000
Total (A+B+C) 13,54,000 100 16,34,000 100
II. Assets
1. Non-Current Assets
a. Fixed Assets
Tangible Assets 5,60,000 7,40,000
Intangible Assets 2,30,000 1,80,000
Total Non-Current Assets (D) 7,90,000 9,20,000
2. Current Assets
Inventories 1,54,000 2,18,000
Trade receivables 3,60,000 4,60,000
Cash & Cash Equivalents 50,000 36,000
Total Current Assets (E) 5,64,000 7,14,000
Total Assets (D+E) 13,54,000 100 16,34,000 100
Particulars 31-12-2019 31-12-2020
Amount Amount Amount Amount
I. Equity & Liabilities
1. Shareholders fund
Share Capital 6,00,000 8,00,000
Reserves & Surplus 1,40,000 7,40,000 2,36,000 10,36,00
0
2. Non-Current Liabilities
Long Term Borrowings 3,00,000 2,00,00
0
3. Current Liabilities
Trade Payables 1,50,000 1,98,000
Short Term provisions
1,64,000
3,14,000
2,00,000
3,98,000
Total 13,54,000 16,34,0
00
II. Assets
1. Non-Current Assets
a. Fixed Assets
Tangible Assets 5,60,000 7,40,000
Intangible Assets 2,30,000 7,90,000 1,80,000 9,20,00
0
2. Current Assets
Inventories 1,54,000 2,18,000
Trade receivables 3,60,000 4,60,000
Cash& CashEquivalents 50,000 5,64,000 36,000 7,14,000
Total 13,54,000 16,34,0
00

16. Solution:
Common Size Statement of Assets & Liabilities
Particulars 31-12-2019 31-12-2020
Amount Percentage Amount Percentage
I. Equity & Liabilities
1. Shareholders fund
Share Capital 6,00,000 8,00,000
Reserves & Surplus 1,40,000 2,36,000
Total Shareholders funds (A) 7,40,000 10,36,000
2. Non-Current Liabilities
Long Term Borrowings 3,00,000 2,00,000
Total Non-Current Liabilities (B) 3,00,000 2,00,000
3. Current Liabilities
Trade Payables 1,50,000 1,98,000
Short Term provisions 1,64,000 2,00,000
Total Current Liabilities (C) 3,14,000 3,98,000
Total (A+B+C) 13,54,000 100 16,34,000 100
II. Assets
1. Non-Current Assets
a. Fixed Assets
Tangible Assets 5,60,000 7,40,000
Intangible Assets 2,30,000 1,80,000
Total Non-Current Assets (D) 7,90,000 9,20,000
2. Current Assets
Inventories 1,54,000 2,18,000
Trade receivables 3,60,000 4,60,000
Cash & Cash Equivalents 50,000 36,000
Total Current Assets (E) 5,64,000 7,14,000
Total Assets (D+E) 13,54,000 100 16,34,000 100

17. Solution:
Common Size Statement of Assets & Liabilities
Particulars 31-12-2019 31-12-2020
Amount Percentage Amount Percentage
I. Equity & Liabilities
1. Shareholders fund
Share Capital 6,00,000 44.31 8,00,000 48.96
Reserves & Surplus 1,40,000 10.34 2,36,000 14.44
Total Shareholders funds (A) 7,40,000 54.65 10,36,000 63.40
2. Non-Current Liabilities
Long Term Borrowings 3,00,000 22.16 2,00,000 12.24
Total Non-Current Liabilities (B) 3,00,000 22.16 2,00,000 12.24
3. Current Liabilities
Trade Payables 1,50,000 11.08 1,98,000 12.12
Short Term provisions 1,64,000 12.11 2,00,000 12.24
Total Current Liabilities (C) 3,14,000 23.19 3,98,000 24.36
Total (A+B+C) 13,54,000 100 16,34,000 100
2019 2020
= 600000/1354000 * 100 = 44.31 = 800000/1634000 * 100 =
48.96
= 140000/1354000 * 100 = 10.34 = 236000/1634000 * 100 =
14.44
= 740000/1354000 * 100 = 54.65 = 1036000/1634000 * 100 =
63.40
= 300000/1354000 * 100 = 22.16 = 200000/1634000 * 100 = 12.24
= 150000/1354000 * 100 = 11.08 = 198000/1634000 * 100 =
12.12
= 164000/1354000 * 100 = 12.11 = 200000/1634000 * 100 =
12.24
= 314000/1354000 * 100 = 23.19 = 398000/1634000 * 100 =
24.36
Calculation of Percentage
to Equity & Liabilities =
Concerned item
X 100
Total Equity &
Lability

18. Solution:
Working Notes:
Calculation of Percentage to Equity & Liabilities =
Concerned item
X 100
Total Equity & Lability
1. Percentage of Share Capital to Equity &
Libilities=
Share Capital
X 100
Total Equity & Lability
2019
=
6,00,000
X 100 = 44.31%
13,54,000
2020
=
8,00,000
X 100 = 48.95%
16,34,000

19. Solution:
Common Size Statement of Assets & Liabilities
2019 2020
= 560000/1354000 * 100 = 41.36 = 740000/1634000 * 100 =
45.29
= 230000/1354000 * 100 = 16.99 = 180000/1634000 * 100 =
11.02
= 790000/1354000 * 100 = 58.35 = 920000/1634000 * 100 =
56.30
= 154000/1354000 * 100 = 11.37 = 218000/1634000 * 100 =
13.34
= 360000/1354000 * 100 = 26.59 = 460000/1634000 * 100 =
28.15
= 50000/1354000 * 100 = 3.69 = 36000/1634000 * 100 =
2.20
= 564000/1354000 * 100 = 41.65 = 714000/1634000 * 100 =
43.70
Calculation of Percentage
to Assets =
Concerned item
X 100
TotalAssets
II. Assets
1. Non-Current Assets
a. Fixed Assets
Tangible Assets 5,60,000 41.36 7,40,000 45.29
Intangible Assets 2,30,000 16.99 1,80,000 11.02
Total Non-Current Assets (D) 7,90,000 58.35 9,20,000 56.30
2. Current Assets
Inventories 1,54,000 11.37 2,18,000 13.34
Trade receivables 3,60,000 26.59 4,60,000 28.15
Cash & Cash Equivalents 50,000 3.69 36,000 2.20
Total Current Assets (E) 5,64,000 41.65 7,14,000 43.70
Total Assets (D+E) 13,54,000 100 16,34,000 100

20. Solution:
Working Notes:
Calculation of Percentage to Assets=
Concerned item
X 100
Total Assets
1. Percentage of Tangible Assets to Total
Assets =
Tangible Assets
X 100
Total Assets
2019
=
5,60,000
X 100 = 41.36%
13,54,000
2020
=
7,40,000
X 100 = 45.29%
16,34,000

21. Solution:
Common Size Statement of Assets & Liabilities
Particulars 31-12-2019 31-12-2020
Amount Percentage Amount Percentage
I. Equity & Liabilities
1. Shareholders fund
Share Capital 6,00,000 44.31 8,00,000 48.96
Reserves & Surplus 1,40,000 10.34 2,36,000 14.44
Total Shareholders funds (A) 7,40,000 54.65 10,36,000 63.40
2. Non-Current Liabilities
Long Term Borrowings 3,00,000 22.16 2,00,000 12.24
Total Non-Current Liabilities (B) 3,00,000 22.16 2,00,000 12.24
3. Current Liabilities
Trade Payables 1,50,000 11.08 1,98,000 12.12
Short Term provisions 1,64,000 12.11 2,00,000 12.24
Total Current Liabilities (C) 3,14,000 23.19 3,98,000 24.36
Total (A+B+C) 13,54,000 100 16,34,000 100
II. Assets
1. Non-Current Assets
a. Fixed Assets
Tangible Assets 5,60,000 41.36 7,40,000 45.29
Intangible Assets 2,30,000 16.99 1,80,000 11.02
Total Non-Current Assets (D) 7,90,000 58.35 9,20,000 56.30
2. Current Assets
Inventories 1,54,000 11.37 2,18,000 13.34
Trade receivables 3,60,000 26.59 4,60,000 28.15
Cash & Cash Equivalents 50,000 3.69 36,000 2.20
Total Current Assets (E) 5,64,000 41.65 7,14,000 43.70
Total Assets (D+E) 13,54,000 100 16,34,000 100

22. Thank You
Watch next PPT & Video for
Problems on Trend Analysis