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Question
Explain the procedure for preparing a common- size statement.
Solution
Common-size statements can be prepared with three columns. Following are the steps to be followed in the preparation of the common–size statement.
- Column 1: In this column, the particulars of items of the income statement or balance sheet are written.
- Column 2: Enter the absolute amount.
- Column 3: Choose a common base as 100.
For example Revenue from operations can be taken as the base for income statement and total of the balance sheet can be taken as the base for the balance sheet. Work out the percentage for all the items of column 2 in terms of the common base and enter them in column 3.
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RELATED QUESTIONS
In a common-size balance sheet, if the percentage of non-current assets is 75, what would be the percentage of current assets?
Prepare a common-size income statement for the following particulars Raja Ltd. for the year ended 31st March 2017.
| Particulars | 2016-17 ₹ |
| Revenue from operations | 4,50,000 |
| Other income | 67,500 |
| Expenses | 1,35,000 |
From the following particulars of Maria ltd and Kala Ltd. Prepare a common-Size income statement for the year ended 31st March 2019.
| Particulars | Maria Ltd ₹ | Kala Ltd ₹ |
| Revenue from operations | 1,00,000 | 2,00,000 |
| Other income | 10,000 | 30,000 |
| Expenses | 70,000 | 1,20,000 |
Prepare a common-size income statement for the following particulars of Sam Ltd. table.
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| Revenue from operations | 4,00,000 | 5,00,000 |
| Other income | 80,000 | 50,000 |
| Expenses | 2,40,000 | 2,50,000 |
| Income Tax | 30% | 30% |
Prepare Common-size balance sheet of Meena Ltd. as of 31st March 2018.
| Particulars | 31st March 2018 |
| I. EQUITY AND LIABILITIES | |
| Shareholder’s Funds | 2,00,000 |
| Non-Current liabilities | 1,60,000 |
| Current liabilities | 40,000 |
| Total | 4,00,000 |
| II. ASSETS | |
| Non- Current assets | 3,00,000 |
| Current assets | 1,00,000 |
| Total | 4,00,000 |
Prepare a common-size statement of financial position for the following particulars of Rani Ltd.
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| Non-Current liabilities | 2,70,000 | 2,50,000 |
| Current liabilities | 90,000 | 1,50,000 |
| Total | 9,00,000 | 10,00,000 |
| II. ASSETS | ||
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| Total | 9,00,000 | 10,00,000 |
Prepare a common-size statement of financial position for the following particulars of Yasmin Ltd. and Sakthi Ltd.
| Particulars | Yasmin Ltd |
Sakthi Ltd. |
| I. EQUITY AND LIABILITIES | ||
| 1. Shareholder's Fund | ||
| a) Share capital | 2,00,000 | 3,00,000 |
| b) Reserves and surplus | 50,000 | 60,000 |
| 2. Non-current liabilities | ||
| Long-term borrowings | 1,50,000 | 1,80,000 |
| 3. Current liabilities | ||
| Trade payables | 1,00,000 | 60,000 |
| Total | 5,00,000 | 6,00,000 |
| II ASSETS | ||
| 1. Non-Current assets | ||
| a) Fixed assets | 2,00,000 | 3,00,000 |
| b) Non-current investments | 50,000 | 1,20,000 |
| 2. Current assets | ||
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