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    What Is A Comparative Statement?

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    Varshini R
    A comparative statement compares a company's financial statements from different periods to identify trends and compare performance over time. It presents previous financial figures alongside the latest in side-by-side columns. A common size balance sheet and income statement express each line item as a percentage of total assets or revenue/sales to facilitate comparison across companies and analysis of what is driving profits. Both tools help analysts evaluate a company's financial position and performance.

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    What Is A Comparative Statement?

    Uploaded by

    Varshini R
    40 views2 pages
    A comparative statement compares a company's financial statements from different periods to identify trends and compare performance over time. It presents previous financial figures alongside the latest in side-by-side columns. A common size balance sheet and income statement express each line item as a percentage of total assets or revenue/sales to facilitate comparison across companies and analysis of what is driving profits. Both tools help analysts evaluate a company's financial position and performance.

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    A comparative statement compares a company's financial statements from different periods to identify trends and compare performance over time. It presents previous financial figures alongside the latest in side-by-side columns. A common size balance sheet and income statement express each line item as a percentage of total assets or revenue/sales to facilitate comparison across companies and analysis of what is driving profits. Both tools help analysts evaluate a company's financial position and performance.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    40 views2 pages

    What Is A Comparative Statement?

    Uploaded by

    Varshini R
    A comparative statement compares a company's financial statements from different periods to identify trends and compare performance over time. It presents previous financial figures alongside the latest in side-by-side columns. A common size balance sheet and income statement express each line item as a percentage of total assets or revenue/sales to facilitate comparison across companies and analysis of what is driving profits. Both tools help analysts evaluate a company's financial position and performance.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    What is a Comparative Statement?

    A comparative statement is a document used to compare a particular financial


    statement with prior period statements. Previous financials are presented alongside the
    latest figures in side-by-side columns, enabling investors to identify trends, track a
    company’s progress and compare it with industry rivals.

    What are Financial Statements?


    Financial statements are a collection of summary-level reports about an organization’s
    financial results, financial position, and cash flows. They include the income statement,
    balance sheet, and statement of cash flows.

    Financial management provides pathways to attain goals and objectives in an


    organisation. The main duty of a financial manager is to measure organisational
    efficiency through proper allocation, acquisition and management.

    The importance of financial management is explained below –

    It provides guidance in financial planning.


    It assists in acquiring funds from different sources.
    It helps in investing an appropriate amount of funds.
    It increases organisational efficiency.
    It reduces delay production.
    It cut down financial costs.
    It reduces cost of fund.
    It ensures proper use of fund.
    It helps business firm to take financial decisions.
    It prepares guideline for earning maximum profits with minimum cost.
    It increases shareholders’ wealth.
    It can control the financial aspects of the business.
    It provides information through financial reporting.
    It makes the employees aware of saving funds.
    Comparative statement of profit and loss
    Comparative Statement of profit and loss is the horizontal analysis of statement of
    profit and loss which shows the operating results for the compared accounting periods,
    changes in data in terms of absolute amount and percentage from one period to
    another. Horizontal analysis is a trend analysis where the firm compares ratios,
    statements etc over a period of time.
    Objectives of comparative statements are :
    Compare financial data at two points of time and
    Helps in deriving the meaning and conclusions regarding the changes in financial positions and
    operating results.
    What is a 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. Common
    size balance sheets are used by internal and external analysts and are not a reporting
    requirement of generally accepted accounting principles (GAAP).

    A common size income statement makes it easier to see what’s driving a company’s
    profits. The common size percentages also help to show how each line item or
    component affects the financial position of the company. As a result, the financial
    statement user can more easily compare the financial performance to the company’s
    peers.

    The purpose of the balance sheet is to reveal the financial status of a business as of a
    specific point in time. The statement shows what an entity owns (assets) and how
    much it owes (liabilities), as well as the amount invested in the business (equity).

    What Is a Common Size Income Statement?


    A common size income statement is an income statement in which each line item is
    expressed as a percentage of the value of revenue or sales. It is used for vertical
    analysis, in which each line item in a financial statement is represented as a
    percentage of a base figure within the statement.1
    Objectives of common-size income statement are to analyse change in individual items
    of statement of profit and loss, to study the trend in different items of revenues and
    expenses and to assess the efficiency of the enterprise.

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