# Accounting: Financial Statements Analysis: Comparative Income Statement (For CBSE, ICSE, IAS, NET, NRA 2022)

Doorsteptutor material for competitive exams is prepared by world's top subject experts: get questions, notes, tests, video lectures and more- for all subjects of your exam.

Comparative Income statement has three columns two for years and last one for Change (there can be fourth column to represent the change in percentage) . This comparative analysis helps in identifying

• Operations of the business and operating profits
• Changes in sales cost of goods sold, selling expenses and office expenses etc.
• Changes in net profits
• The progress of a business over a period of time

Example: The income statements of a concern are given for the year ending 31st December 2006 and 2007. Rearrange the figures in a comparative form and study the profitability 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 Net salesLess Cost of goods soldGross ProfitOperating Expenses:General & Admin.Selling expensesTotal Operating ExpensesOperating profitLess: Other deductionsInterest receivedNet profit before taxLess income taxNet profit after tax 7850004500003350007000080000150000185000250001600007000090000 90000050000040000072000900001620002380003000020800080000128000 + 115000+ 50000+ 65000+ 2000+ 10000+ 12000+ 53000+ 5000+ 48000+ 10000+ 38000 + 14.56+ 11.11+ 19.40+ 2.8+ 12.5+ 8.0+ 28.65+ 20+ 30+ 14.28+ 42.22

## Interpretation

• The comparative income statement given above shows that there has been an increase in net sales of 14.65 % . The cost of goods sold has increased by 11 % . This has resulted in increase of gross profit by 19.4 % .
• Operating expenses have increased by 8 % . The increase in gross profit is sufficient to cover the operating expenses. There is also an increase in net profit after tax of ₹ 38000 i.e.. 42.22 % .
• It is concluded from the above analysis that there is sufficient progress in the performance of the company and the overall profitability of the company is good.

Developed by: