From the following particulars obtained from the books of Mark Ltd., prepare a Comparative Statement of Profit and Loss : | Particulars | Note No. | 2017 – 18 ₹ | 2016 – 17 ₹ | | --- | --- | --- | --- | | Revenue from operations | | 50,00,000 | 40,00,000 | | Purchase of stock-in trade | | 40,00,000 | 30,00,000 | | Changes in inventory | | 10,00,000 | 8,00,000 | | Other expenses | | 5,00,000 | 4,00,000 | | Other incomes | | 2,50,000 | 2,00,000 | OR From the following Balance Sheet of Swaraj Ltd., as at 31st March, 2019, prepare a common size Balance Sheet : Swaraj Ltd. Balance Sheet as at 31st March, 2019 | Particulars | Note No. | 31.3.2019 ₹ | 31.3.2018 ₹ | | --- | --- | --- | --- | | I – Equity and Liabilities : | | | | | 1. Shareholders Funds : | | | | | (a) Share Capital | | 34,00,000 | 30,00,000 | | (b) Reserves and Surplus | | 10,00,000 | 10,00,000 | | 2. Non-Current Liabilities : | | | | | Long-term Borrowings | | 5,00,000 | 3,00,000 | | 3. Current Liabilities : | | | | | Trade Payables | | 1,00,000 | 7,00,000 | | Total | | 50,00,000 | 50,00,000 | | II – Assets : | | | | | 1. Non-Current Assets : | | | | | Fixed Assets : | | | | | Tangible Assets | | 36,00,000 | 28,00,000 | | 2. Current Assets : | | | | | (a) Inventories | | 13,00,000 | 20,00,000 | | (b) Cash and Cash Equivalents | | 1,00,000 | 2,00,000 | | Total | | 50,00,000 | 50,00,000 |

From the following particulars obtained from the books of Mark Ltd., prepare a Comparative Statement of Profit

Question

From the following particulars obtained from the books of Mark Ltd., prepare a Comparative Statement of Profit and Loss :

Particulars	2017 – 18 ₹	2016 – 17 ₹
Revenue from operations	50,00,000	40,00,000
Purchase of stock-in trade	40,00,000	30,00,000
Changes in inventory	10,00,000	8,00,000
Other expenses	5,00,000	4,00,000
Other incomes	2,50,000	2,00,000

From the following Balance Sheet of Swaraj Ltd., as at 31st March, 2019, prepare a common size Balance Sheet :

Swaraj Ltd. Balance Sheet as at 31st March, 2019

Particulars	31.3.2019 ₹	31.3.2018 ₹
I – Equity and Liabilities :
1. Shareholders Funds :
(a) Share Capital	34,00,000	30,00,000
(b) Reserves and Surplus	10,00,000	10,00,000
2. Non-Current Liabilities :
Long-term Borrowings	5,00,000	3,00,000
3. Current Liabilities :
Trade Payables	1,00,000	7,00,000
Total	50,00,000	50,00,000
II – Assets :
1. Non-Current Assets :
Fixed Assets :
Tangible Assets	36,00,000	28,00,000
2. Current Assets :
(a) Inventories	13,00,000	20,00,000
(b) Cash and Cash Equivalents	1,00,000	2,00,000
Total	50,00,000	50,00,000

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Part (a)Concept understanding — Financial Statement Analysis

Financial Statement Analysis – A First Look

Think of a doctor checking your health. They don't just look at your height or weight alone — they compare your current weight with last year's, check your pulse rate against normal ranges, and see if your fever is rising or falling. That's analysis: taking raw numbers and asking "what does this mean?"

Financial Statement Analysis is exactly that — but for a business. You already know the two main financial statements from Class 11: the Balance Sheet (a snapshot of what the business owns and owes on a particular date) and the Statement of Profit and Loss (the earnings story for the year). Analysis is what you do after those statements are prepared. You don't just read the numbers; you interpret them, compare them, and draw conclusions.

The Precise Meaning

As the NCERT Class 12 Accountancy textbook puts it:

Financial Statement Analysis is the process of reviewing, evaluating, and interpreting a business's financial statements to assess its performance, financial position, and future prospects.

In simpler words: you take the raw data from the Profit & Loss Account and Balance Sheet, and you turn it into useful insights — Is the company making enough profit? Can it pay its debts? Is it growing or shrinking?

Why Does It Matter?

Three big reasons:

For owners and investors — to decide whether to invest more money or take some out.
For lenders (banks) — to check if the business can repay loans.
For managers — to spot problems early (e.g., rising costs, falling sales) and fix them.

Without analysis, a Balance Sheet is just a list of numbers. With analysis, it becomes a story.

The Tools of Analysis (What You Actually Do)

NCERT focuses on three main techniques:

1. Comparative Statements

You take the same statement (say, the Profit & Loss Account) for two consecutive years and put them side by side. Then you calculate the absolute change (increase or decrease in rupees) and the percentage change.

Format for a Comparative Statement of Profit & Loss:

Particulars	2022–23 (₹)	2023–24 (₹)	Absolute Change (₹)	Percentage Change (%)
Revenue from Operations	5,00,000	6,00,000	1,00,000	20%
Cost of Materials Consumed	2,00,000	2,50,000	50,000	25%
Gross Profit	3,00,000	3,50,000	50,000	16.67%

Note

The percentage change is calculated as: (Absolute Change ÷ Previous Year Figure) × 100. Always use the earlier year as the base.

2. Common Size Statements

Here, you express every item as a percentage of a common base. For the Profit & Loss Account, the base is Revenue from Operations (100%). For the Balance Sheet, the base is Total Assets (or Total Liabilities).

Format for a Common Size Balance Sheet (partial):

Particulars	Amount (₹)	Percentage of Total
I. EQUITY AND LIABILITIES
Shareholders' Funds	4,00,000	40%
Non-Current Liabilities	3,00,000	30%
Current Liabilities	3,00,000	30%
Total	10,00,000	100%

This instantly tells you: 40% of the company's funding comes from owners, 60% from outsiders.

3. Ratio Analysis

This is the most powerful tool. A ratio is simply one number divided by another. NCERT classifies ratios into three groups:

Liquidity Ratios — Can the business pay its short-term bills? (e.g., Current Ratio = Current Assets ÷ Current Liabilities)
Solvency Ratios — Can it pay its long-term debts? (e.g., Debt-Equity Ratio = Long-term Debt ÷ Shareholders' Funds)
Profitability Ratios — How much profit is it earning? (e.g., Gross Profit Ratio = Gross Profit ÷ Revenue from Operations × 100)

Important

A ratio by itself means nothing. You must compare it — with the industry average, with the company's past ratios, or with a standard norm. For example, a Current Ratio of 2:1 is generally considered healthy, but a ratio of 1:1 might signal trouble.

Accounting Treatment — What Gets Debited and Credited? …

Part (b)Concept understanding — Financial Statement Analysis

Financial Statement Analysis – A First Look

The Precise Meaning

As the NCERT Class 12 Accountancy textbook puts it:

Financial Statement Analysis is the process of reviewing, evaluating, and interpreting a business's financial statements to assess its performance, financial position, and future prospects.

Why Does It Matter?

Three big reasons:

For owners and investors — to decide whether to invest more money or take some out.
For lenders (banks) — to check if the business can repay loans.
For managers — to spot problems early (e.g., rising costs, falling sales) and fix them.

Without analysis, a Balance Sheet is just a list of numbers. With analysis, it becomes a story.

The Tools of Analysis (What You Actually Do)

NCERT focuses on three main techniques:

1. Comparative Statements

Format for a Comparative Statement of Profit & Loss:

Particulars	2022–23 (₹)	2023–24 (₹)	Absolute Change (₹)	Percentage Change (%)
Revenue from Operations	5,00,000	6,00,000	1,00,000	20%
Cost of Materials Consumed	2,00,000	2,50,000	50,000	25%
Gross Profit	3,00,000	3,50,000	50,000	16.67%

Note

The percentage change is calculated as: (Absolute Change ÷ Previous Year Figure) × 100. Always use the earlier year as the base.

2. Common Size Statements

Format for a Common Size Balance Sheet (partial):

Particulars	Amount (₹)	Percentage of Total
I. EQUITY AND LIABILITIES
Shareholders' Funds	4,00,000	40%
Non-Current Liabilities	3,00,000	30%
Current Liabilities	3,00,000	30%
Total	10,00,000	100%

This instantly tells you: 40% of the company's funding comes from owners, 60% from outsiders.

3. Ratio Analysis

This is the most powerful tool. A ratio is simply one number divided by another. NCERT classifies ratios into three groups:

Liquidity Ratios — Can the business pay its short-term bills? (e.g., Current Ratio = Current Assets ÷ Current Liabilities)
Solvency Ratios — Can it pay its long-term debts? (e.g., Debt-Equity Ratio = Long-term Debt ÷ Shareholders' Funds)
Profitability Ratios — How much profit is it earning? (e.g., Gross Profit Ratio = Gross Profit ÷ Revenue from Operations × 100)

Important

Accounting Treatment — What Gets Debited and Credited? …

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Part (a)

Comparative Statement of Profit and Loss of Mark Ltd. (2016-17 to 2017-18)

Particulars	2016-17 (₹)	2017-18 (₹)	Absolute Change (₹)	% Change
Revenue from Operations	40,00,000	50,00,000	10,00,000	25.00
Add: Other Income	2,00,000	2,50,000	50,000	25.00
Total Revenue	42,00,000	52,50,000	10,50,000	25.00
Purchases of Stock-in-Trade	30,00,000	40,00,000	10,00,000	33.33
Changes in Inventory	8,00,000	10,00,000	2,00,000	25.00
Other Expenses	4,00,000	5,00,000	1,00,000	25.00
Total Expenses	42,00,000	55,00,000	13,00,000	30.95

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Part (a): Total Revenue +25% (₹52,50,000); Total Expenses +30.95% (₹55,00,000); Profit before Tax turns from Nil to a ₹2,50,000 loss.

Part (b): Common size — Share Capital 68% (was 60%), Tangible Assets 72% (was 56%), Trade Payables 2% (was 14%), Inventories 26% (was 40%).

Part (a): Comparative Statement of Profit and Loss

A comparative statement shows each item's absolute and percentage change over the base year (2016-17).

Percentage change = (Absolute change ÷ Base-year figure) × 100.

Base-year (2016-17) Profit before Tax = Total Revenue 42,00,000 − Total Expenses (30,00,000 + 8,00,000 + 4,00,000 = 42,00,000) = Nil.

Current-year (2017-18) Profit before Tax = 52,50,000 − (40,00,000 + 10,00,000 + 5,00,000 = 55,00,000) = (2,50,000).

Particulars	2016-17 (₹)	2017-18 (₹)	Absolute Change (₹)	% Change
Revenue from Operations	40,00,000	50,00,000	10,00,000	25.00
Add: Other Income	2,00,000	2,50,000	50,000	25.00
Total Revenue (A)	42,00,000	52,50,000	10,50,000	25.00
Purchases of Stock-in-Trade	30,00,000	40,00,000	10,00,000	33.33
Changes in Inventory	8,00,000	10,00,000	2,00,000	25.00
Other Expenses	4,00,000	5,00,000	1,00,000	25.00
Total Expenses (B)	42,00,000	55,00,000	13,00,000	30.95
Profit before Tax (A − B)	Nil	(2,50,000)	(2,50,000)	N/A

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Same / Similar Concept — real previous-year questions on the same or a closely similar concept, not this exact question.

Showing the 12 most recent of 41 on this concept.

CBSE 2026Set MARCH1 markMCQ
$Q. Which of the following analyses shows duration-based classification?$
(a) External analysis
(b) Horizontal analysis
(c) Short-term analysis
(d) Vertical analysis
›Reveal solutionSolution

Duration-based classification of analysis is represented by short-term (and long-term) analysis, so the answer is (c).

Financial statement analysis is classified on different bases:

Basis of classification Types
Material used Internal and external analysis
Modus operandi / method Horizontal and vertical analysis
Duration / time span Short-term and long-term analysis

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Basis of classification	Types
Material used	Internal and external analysis
Modus operandi / method	Horizontal and vertical analysis
Duration / time span	Short-term and long-term analysis

CBSE 2026Set MARCH1 mark

Q. Match the following : A B a) Valuation of goodwill i) Acknowledgement of debt b) Debentures ii) Earnings per share c) Revenue from operations iii) Inflows and Outflows of cash d) Profitability Ratio iv) Average profit method e) Cash flow statement v) Sales vi) Financial position

A	B
a) Valuation of goodwill	i) Acknowledgement of debt
b) Debentures	ii) Earnings per share
c) Revenue from operations	iii) Inflows and Outflows of cash
d) Profitability Ratio	iv) Average profit method
e) Cash flow statement	v) Sales
	vi) Financial position

›Reveal solution

Correct pairings: a-iv, b-i, c-v, d-ii, e-iii (option vi is a distractor).

Each term is matched to its meaning from the Karnataka 2nd PUC Accountancy syllabus:

…

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CBSE 2026Set MARCH1 mark
$Q. State any one user of Financial Statement Analysis.$
›Reveal solutionSolution

One user of financial statement analysis is the investor/shareholder (others include management, creditors, banks, employees and government).

Financial statement analysis serves several interested parties who need information to make economic decisions.

…

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CBSE 2025Set MARCH1 markMCQ
$Q. Which of the following analyses shows stakeholders-based classification?$
(a) External analysis
(b) Horizontal analysis
(c) Short term analysis
(d) Vertical analysis
›Reveal solutionSolution
Based on the party doing the analysis (stakeholders), analysis is internal or external; the option here is external analysis. Correct option: (a).

In GSEB Class-12 Commerce Accountancy (Analysis of Financial Statements):

On the basis of the person/party (stakeholders) analysing: Internal analysis (by management) and External analysis (by outsiders such as investors, banks, creditors). …
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CBSE 2025Set ANNUAL1 markMCQ
$Q. Parties interested in financial statements are (A) Managers (B) Financial institutions (C) Creditors (D) All of these$
›Reveal solutionSolution
Financial statements serve a wide range of users — internal (management) and external (financial institutions, creditors, investors) — each needing the information for their own decisions. Hence the answer is (D) All of these.

For the BSEB Inter / Bihar Class-12 Accountancy syllabus, the parties interested in financial statements include:

Managers: to plan, control and take operating decisions.

Financial institutions / banks: to assess creditworthiness before lending. …
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CBSE 2025Set ANNUAL1 markMCQ
$Q. When financial statements of two or more organisations are analysed, it is called (A) Intra-firm analysis (B) Inter-firm analysis (C) Vertical analysis (D) None of these$
›Reveal solutionSolution
Comparing the financial statements of two or more separate organisations is a comparison between firms, called inter-firm analysis. Hence the answer is (B) Inter-firm analysis.

For Bihar Class-12 (BSEB Inter) commerce candidates, financial analysis can be classified by the basis of comparison:

Intra-firm analysis: comparing the figures of the same firm over different years (within one firm).

Inter-firm analysis: comparing the figures of two or more different firms for the same period. …
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CBSE 2025Set ANNUAL1 markMCQ
$Q. Financial analysis is useful for (A) Investors (B) Shareholders (C) Debenture holders (D) All of them$
›Reveal solutionSolution
Financial analysis helps all stakeholders assess profitability, solvency and safety of their funds — investors, shareholders and debenture holders each use it. Hence the answer is (D) All of them.

For the BSEB Inter / Bihar Class-12 Accountancy syllabus, financial statement analysis serves many users:

Investors: to decide whether to invest, judging earning capacity and growth.

Shareholders: to evaluate profitability, dividend prospects and the safety of their investment. …
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CBSE 2025Set ANNUAL1 markMCQ
$Q. Which of the following is not the method of financial statement analysis ? (A) Ratio Analysis (B) Comparative Analysis (C) Trend Analysis (D) Capitalisation Method$
›Reveal solutionSolution
Ratio analysis, comparative statements and trend analysis are standard tools of financial statement analysis, whereas the capitalisation method is used to value goodwill or a business. Hence the answer is (D) Capitalisation Method.

For Bihar Class-12 (BSEB Inter) commerce candidates, the common methods/tools of financial statement analysis are:

Comparative statements

Common-size statements

Trend analysis (trend percentages)

Ratio analysis

Cash flow statement …
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CBSE 2025Set ANNUAL1 markMCQ
$Q. Which of the following is a tool of financial statement analysis? (A) Cash Book (B) Trial Balance (C) Trend Analysis (D) All of these.$
›Reveal solutionSolution

Trend Analysis is the tool of financial statement analysis — option (C).

Tools of financial statement analysis are techniques used to study, compare and interpret financial data. The common tools are comparative statements, common-size statements, trend analysis, ratio analysis and cash flow statements. A Cash Book and a Trial Balance are part of the basic book-keeping/recording process, n …

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CBSE 2025Set ANNUAL1 markMCQ
$Q. Which of the following is not an example of spreadsheet software? (A) Word Pro (B) MS-Excel (C) Lotus 1-2-3 (D) None of these.$
›Reveal solutionSolution

Word Pro is not a spreadsheet package — option (A).

Spreadsheet software organises data in a grid of rows and columns and is used for calculations, charts and analysis. MS-Excel and Lotus 1-2-3 are well-known spreadsheet programs. Word Pro, however, is a word-processing application (part of the Lotus SmartSuite) used to …

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CBSE 2025Set ANNUAL1 markMCQ
$Q. The next column to Z column in MS-Excel is (A) AA (B) AZ (C) AB (D) AC.$
›Reveal solutionSolution

The column after Z in MS-Excel is AA — option (A).

In MS-Excel, columns are named alphabetically: A, B, C, ... up to Z (26 single-letter columns). After column Z, the labels continue with two letters starting from AA, then AB, AC, and so on up to AZ …

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CBSE 2025Set ANNUAL1 markMCQ
$Q. The financial function used in calculation of payment of any loan is (A) SLN (B) PMT (C) COUNTIF (D) SUMIF$
›Reveal solutionSolution
PMT is used to calculate loan payments — option (B).

MS-Excel's financial functions include several for different purposes:

PMT calculates the periodic payment (instalment) for a loan based on constant payments and a constant interest rate.

SLN calculates straight-line depreciation of an asset. …
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Part (a): Comparative Statement of Profit and Loss

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