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प्रश्न
What is the importance of comparative statements? Illustrate your answer with particular reference to comparative income statement.
उत्तर
The following are the importance of Comparative Statements.
1. Simple Presentation
The Comparative Statements present the financial data in a simpler form. Moreover, the year-wise data of the same items are presented side-by-side, which not only makes the presentation clear but also enables easy comparisons (both intra-firm and inter-firm) conclusive.
2. Easy for Drawing Conclusion
The presentation of comparative statement is so effective that it enables the analyst to draw conclusion quickly and easily and that too without any ambiguity
3. Easy to Forecast
The comparative analysis of profitability and operational efficiency of a business over a period of time helps in analysing the trend and also assists the management to forecast and draft various future plans and policy measures accordingly.
4. Easy Detection of Problems
By comparing the financial data of two or more years, the financial management can easily detect the problems. While comparing the data, some items may have increased while others have decreased or remained constant. The comparative analysis not only enables the management in locating the problems but also helps them to put various budgetary controls and corrective measures to check whether the current performance is aligned with that of the planned targets.
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संबंधित प्रश्न
What do you mean by Common Size Statements?
Describe the different techniques of financial analysis.
Explain the usefulness of trend percentages in interpretation of financial performance of a company.
Following are the balance sheets of Alpha Ltd. as at March 31st, 2016 and 2017:
Following are the balance sheets of Alpha Ltd. as at March 31st, 2016 and 2017:
| Particulars | 2016 Rs. |
2017 Rs. |
| I. Equity and Liabilities |
|
|
|
Equity share capital |
2,00,000 | 4,00,000 |
|
Reserves and surplus |
1,00,000 | 1,50,000 |
|
Long-term borrowings |
2,00,000 | 3,00,000 |
|
Short-term borrowings |
50,000 | 70,000 |
|
Trade payables |
30,000 | 60,000 |
|
Short-term provisions |
20,000 | 10,000 |
|
Other current liabilities |
20,000 | 30,000 |
| Total | 6,20,000 | 10,20,000 |
| II. Assets | ||
|
Fixed assets |
2,00,000 | 5,00,000 |
|
Non-current investments |
1,00,000 | 1,25,000 |
|
Current investments |
60,000 | 80,000 |
|
Inventories |
1,35,000 | 1,55,000 |
|
Trade receivables |
60,000 | 90,000 |
|
Short term loans and advances |
40,000 | 60,000 |
|
Cash at bank |
25,000 | 10,000 |
| Total | 6,20,000 | 10,20,000 |
You are required to prepare a Comparative Balance Sheet.
From the following Balance Sheet, prepare Comparative Balance Sheet of Sun Ltd.:
| Particulars | Note No. |
31st March, 2019 (₹) |
31st March, 2018 (₹) |
| I. EQUITY AND LIABILITIES
1. Shareholder's Funds |
|||
|
(a) Share Capital |
3,50,000 | 3,00,000 | |
|
2. Non-Current Liabilities |
|||
|
Long-term Borrowings |
1,00,000 | 2,00,000 | |
|
3. Current Liabilities : |
|||
|
Trade Payables |
1,50,000 | 1,00,000 | |
| Total | 6,00,000 | 6,00,000 | |
|
II. ASSETS |
|||
|
1. Non-Current Assets |
|||
|
Fixed Assets (Tangible) |
4,00,000 | 3,00,000 | |
|
2. Current Assets |
|||
|
Trade Receivables |
2,00,000 |
3,00,000 |
|
| Total |
6,00,000 |
6,00,000 |
Following is the summarised Balance Sheet of Wye Ltd. as at 31st March, 2019:
|
Particulars |
Note No. |
31st March, (₹) |
31st March, (₹) |
| I. EQUITY AND LIABILITIES | |||
|
1. Shareholders' Funds |
|
||
|
(a) Share Capital: |
|
|
|
|
(i) Equity Share Capital |
4,00,000 |
4,00,000 | |
|
(ii) Preference Share Capital |
1,00,000 | 1,00,000 | |
|
(b) Reserves and Surplus |
1,20,000 | 1,10,000 | |
|
2. Non-Current Liabilities |
|||
|
(a) Long-term Borrowings |
1. | 4,50,000 | 4,50,000 |
|
(b) Long-term Provisions |
50,000 | 1,00,000 | |
|
3. Current Liabilities |
|||
|
(a) Trade Payables (Creditors) |
5,30,000 | 3,30,000 | |
|
(b) Short-term Provisions |
|
50,000 |
50,000 |
|
Total |
17,00,000 |
15,40,000 | |
| II. ASSETS |
|
||
|
1. Non-Current Assets |
|||
|
(a) Fixed Assets (Tangible) |
9,90,000 | 10,40,000 | |
|
(b) Non-Current Investments |
1,00,000 | 1,00,000 | |
|
2. Current Assets |
|||
|
(a) Trade Receivables |
5,00,000 | 3,00,000 | |
|
(b) Cash and Cash Equivalents |
2 |
1,10,000 |
1,00,000 |
|
Total |
17,00,000 |
15,40,000 |
Notes to Accounts
|
Particulars |
31st March, (₹) |
31st March, (₹) |
| I. Long-term Borrowings | ||
|
Bank Loan |
3,50,000 |
4,50,000 |
|
8% Debentures |
1,00,000 |
... |
|
4,50,000 |
4,50,000 | |
| 2. Cash and Cash Equivalents | ||
|
Bank Balance |
1,00,000 |
90,000 |
|
Cash in Hand |
10,000 |
10,000 |
|
1,10,000 |
1,00,000 |
You are required to comment upon the changes in absolute figures from one period to another.
Following information is extracted from the Statement of Profit and Loss of Gold Coin Ltd. for the year ended 31st March, 2015:
|
Particulars |
31st March, 2015 |
31st March, 2014 |
|
Revenue from Operations |
₹ 60,00,000 |
₹ 45,00,000 |
|
Employee Benefit Expenses |
₹ 30,00,000 |
₹ 22,50,000 |
|
Depreciation |
₹ 7,50,000 |
₹ 6,00,000 |
|
Other Expenses |
₹ 15,50,000 |
₹ 10,00,000 |
|
Tax Rate |
30% |
30% |
Which of the following is not a tool of financial analysis?
Answer the following question:
X Ltd. redeemed ₹ 1,00,000, 9% debentures at 10% premium. What will be the amount of 'Cash Flows from financing activities'?
Which of the following are the tools of Vertical Analysis?
- Ratio Analysis
- Comparative Statements
- Common Size Statements
Comparative analysis is also known as ______ analysis.
The analysis of actual movement of money inflow and outflow in an organization is called ______ analysis.
What is the procedure for calculating trend percentage?
Consider the following statements.
Statement 1 - "Cash Flow Statement is a tool of financial statement analysis".
Statement 2 - Cash flow statement is usually prepared by companies which comes as a tool in the hands of users of financial information to know about the sources and uses of cash.
Techniques which are used to identify financial statements trends include:
Consider the following statements given below:
- In Common-size Balance Sheet, each item is converted into the percentage of share capital.
- In Common-size Statement of Profit and Loss, each item is converted into the percentage of total expenses.
- In Comparative Statement of Profit and Loss, absolute and percentage change in the items during two periods of time are calculated.
Choose the correct option:
Ratios provide a ______ measure of a company's performance and condition.
Main objective of the Common Size Balance Sheet is:
In a Common Size Balance Sheet, Total Liabilities are assumed to be equal to ______.
