Fundamentals of Management Accounting · Ch 2 — Analysis of Financial Statement
Comparative Statements
Comparative Statements
A comparative statement places the financial statements of two (or more) periods alongside one another and, for each item, shows the absolute change (the increase or decrease in rupees) and the percentage change from the earlier period to the later one. The two comparative statements ordinarily prepared are the Comparative Statement of Profit and Loss (comparative income statement) and the Comparative Balance Sheet.
The two working columns are computed for every line as follows:
- Absolute change = Figure in the current year − Figure in the previous year.
- Percentage change = (Absolute change ÷ Figure in the previous year) × 100. The previous year is always the base for the percentage, because we are measuring how much the item has grown or shrunk relative to where it started.
Worked Example 1 — Comparative Statement of Profit and Loss
From the following information, prepare a comparative statement of profit and loss for the years ended 31 March 2023 and 31 March 2024.
| Particulars | 2022-23 (₹) | 2023-24 (₹) |
|---|---|---|
| Revenue from operations | 6,00,000 | 8,00,000 |
| Cost of materials consumed | 3,00,000 | 4,20,000 |
| Other (operating) expenses | 1,00,000 | 1,30,000 |
| Tax rate | 40% | 40% |
Solution. For each item we compute the absolute change and then the percentage change on the 2022-23 base.
| Particulars | 2022-23 (₹) | 2023-24 (₹) | Absolute change (₹) | % change |
|---|---|---|---|---|
| Revenue from operations | 6,00,000 | 8,00,000 | 2,00,000 | 33.33% |
| Less: Cost of materials consumed | 3,00,000 | 4,20,000 | 1,20,000 | 40.00% |
| Less: Other (operating) expenses | 1,00,000 | 1,30,000 | 30,000 | 30.00% |
| Total expenses | 4,00,000 | 5,50,000 | 1,50,000 | 37.50% |
| Profit before tax | 2,00,000 | 2,50,000 | 50,000 | 25.00% |
| Less: Tax @ 40% | 80,000 | 1,00,000 | 20,000 | 25.00% |
| Profit after tax | 1,20,000 | 1,50,000 | 30,000 | 25.00% |
Sample computations: Revenue change = 8,00,000 − 6,00,000 = 2,00,000; % = 2,00,000 ÷ 6,00,000 × 100 = 33.33%. Total expenses = 4,20,000 + 1,30,000 = 5,50,000 (2023-24) versus 3,00,000 + 1,00,000 = 4,00,000 (2022-23); change 1,50,000; % = 1,50,000 ÷ 4,00,000 × 100 = 37.50%. Profit before tax = 2,00,000 → 2,50,000; change 50,000; % = 25%. …
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