IEO Level 2- English Olympiad (SOF) Class 9 Coaching Programs
⏳ 🎯 Online Tests (2 Tests [50 Questions Each]): NTA Pattern, Analytics & Explanations
Click Here to View & Get Complete Material
Rs. 200.00
3 Year Validity (Multiple Devices)
🎓 Study Material (303 Notes): 2024-2025 Syllabus
Click Here to View & Get Complete Material
Rs. 450.00
3 Year Validity (Multiple Devices)
🎯 250 MCQs (& PYQs) with Full Explanations (2024-2025 Exam)
Click Here to View & Get Complete Material
Rs. 200.00
3 Year Validity (Multiple Devices)
Accounting: Financial Statements Analysis: Comparative Balance Sheet
Comparative Balance Sheet has three columns for Assets, Liabilities and Change (there can be fourth column to represent the change in percentage) to denote whether there is increase or decrease. This comparative analysis helps in identifying
- Current liquidity – by examining working capital in both the years.
- Financial position – by examining short term and long -term asset and liabilities of the company.
Example: The following is the Balance Sheets of MS Gupta for the years 2006 and 2007. Prepare the comparative Balance Sheet and study the financial position of the concern.
Solution:
Comparative Balance Sheet of MS Gupta for the year ending December 2006 and 2007
Year ending on 31st Dec | Increase⟋Decrease (Amount ₹) | Increase⟋Decrease (Percentage) | ||
---|---|---|---|---|
2006 | 2007 | |||
ASSETS: I Current Assets Cash in hand Bills Receivables Sundry Debtors Stock Prepaid Expenses Total Current Assets II Fixed Assets Land & Building Plant & Machinery Furniture Other Fixed Assets Total Fixed Assets Total Assets Liabilities & Capital: I Current Liabilities Bills payable Sundry Creditors Other Current liabilities Total Current Liabilities II Long-term Liabilities Debentures Long term loan on mortgage Total Long-term liabilities Total Liabilities III Capital Equity Share capital Reserves & Surplus Total Owned equities Total Capital & Liabilities | 20000 100000 200000 250000 - | 40000 80000 250000 350000 2000 | + 20000 -20000 + 50000 + 100000 + 2000 | + 100 -20 + 25 + 40 + 100 |
570000 | 722000 | + 152000 | + 26.67 | |
270000 400000 20000 25000 | 170000 600000 25000 30000 | -100000 + 200000 + 5000 + 5000 | -37.03 + 50 + 25 + 20 | |
715000 | 825000 | + 110000 | + 13.49 | |
1285000 | 1547000 | + 262000 | + 20.39 | |
50000 100000 5000 | 45000 120000 10000 | -5000 + 20000 + 5000 | -10 + 20 + 100 | |
155000 200000 100000 | 175000 300000 150000 | + 20000 + 100000 + 50000 | + 12.9 + 50 + 50 | |
300000 | 450000 | + 150000 | + 50 | |
455000 | 625000 | + 170000 | + 37.36 | |
500000 330000 830000 | 700000 222000 922000 | + 200000 -108000 + 82000 | + 40 -32.73 + 50 | |
1285000 | 1547000 | + 262000 | + 20.39 |
Interpretation
- The comparative balance sheet of the company reveals that during 2007 there has been an increase in fixed assets of 110,000 i.e.. 13.49% . Long-term liabilities to outsiders have relatively increased by Rs 150,000 and equity share capital has increased by Rs 200000. This fact indicates that the policy of the company is to purchase fixed assets from the long-term sources of finance.
- The current assets have increased by Rs 152000 i.e.. 26.67% and cash has increased by Rs 20,000. The current liabilities have increased only by Rs 20000 i.e.. 12.9% . This further confirms that the company has used long-term finances even for the current assets resulting into an improvement in the liquidity position of the company.
- Reserves and surplus have decreased from Rs 330,000 to Rs 222,000 i.e.. 32.73% which shows that the company has utilized reserves and surplus for the payment of dividends to shareholders either in cash or by way of bonus.
- The overall financial position of the company is satisfactory.