Accounts Project Isc (Mine)

ACKNOWLEDGEMENT
I would like to express my special thanks of gratitude to my

Accounts teachers as well as our principal, Dr Bhakta Sundar
Sharma who gave me the golden opportunity to do this wonderful
project on thetopic (PREPARATION OF COMPARATIVE AND
COMMON SIZE STATEMENT AND BALANCE SHEET), which also
helped me in doing a lot of Research and I came to know about so
many new things I am really thankful to them.
Secondly I would also like to thank my parents and friends who

helped me a lot in finalizing this project within thetime frame
INTRODUCTION
Financial statement analysis is the process of analyzing a company's financial
statements for decision-making purposes. External stakeholders use it to understand
the overall health of an organization as well as to evaluate financial performance and
business value. Internal constituents use it as a monitoring tool for managing the
finances. It is a study of relationships among various financial figures as set out in
the financial statements i.e. Balance Sheet and Statement of Profit and Loss to make
assessment of Liquidity, Long –term Solvency, Operating Efficiency and Profitability
of the enterprise.
Tools for Financial Statement Analysis:
 Comparative Statements: Comparative Statement means a comparative study

of individual items or components of financial statements i.e. Balance Sheet
and Statement of Profit and Loss of two or more years of the enterprise itself.
 Common-size statement:Common-size Statement mean statements in which

individual items or components of financial statements of two or more years
are placed side by side and thereafter converted into percentage taking a
common base.
 Cash Flow Statement: Cash Flow Statement is a statement showing flow of

Cash and Cash Equivalents during the accounting period, classified under
Operating Activities, Investing Activities and Financial Activities.
 Ratio Analysis: Ratio is an arithmetical expression of relationship between two

related or interdependent items orComponents of financial statements of an
accounting period.
Significance of Financial Analysis.
 To assess whether the resources of the firm are used in the most efficient
manner
 Whether the financial condition of the firm is sound
 To determine the success of the company’s operations
 Appraising the individual’s performance
 evaluating the system of internal control
 To investigate the future prospects of the enterprise.
Comparative financial statement

The comparative financial statements are statements of the financial position at
different periods; of time. The elements of financial position are shown in a
comparative form so as to give an idea of financial position at two or more periods.
Any statement prepared in a comparative form will be covered in comparative
statements.
From practical point of view, generally, two financial statements (balance sheet and
income statement) are prepared in comparative form for financial analysis purposes.
Not only the comparison of the figures of two periods but also be relationship
between balance sheet and income statement enables an in depth study of financial
position and
Significance of comparative financial statement:
 Make the Data Simpler and More Understandable: When data for a number of
years are put side-by-side in a comparative ‘form it becomes easier to
understand them and the conclusions regarding the profitability and financial
position of the concern can be drawn very easily.
 To Indicate the Trend: This helps in indicating the trend of change by putting
the figures of production, sales, expenses, profits etc. for number of year’s side-
by-side.
 To Indicate the Strong Points and Weak Points of the Concern: It may also
indicate the strong points and weak points of the firm. Management can then
investigate and find out the reasons for the weak areas and can take corrective
measures.
 To Compare the Firm’s Performance with the Average Performance of the

Industry: Comparative financial statements help a business unit to compare
its’ performance with the average performance of the industry.
 To Help in Forecasting: Comparative study of the changes in the key figures

over a period helps the management in forecasting the profitability and
financial soundness of the business.
Limitation of comparative financial statement:
 These statements do not present the change in various items in relation to total
assets, total liabilities or net sales.
 These statements are not useful in comparing financial statements of two or
more business because there is no common base.
Common-size financial
statement
The common-size statements, balance sheet and income statement are shown in
analytical percentages. The figures are shown as percentages of total assets, total
liabilities and total sales. The total assets are taken as 100 and different assets are
expressed as a percentage of the total. Similarly, various liabilities are taken as a part
of total liabilities.
These statements are also known as component percentage or 100 per cent
statements because every individual item is stated as a percentage of the total 100.
The short-comings in comparative statements and trend percentages where changes
in items could not be compared with the totals have been covered up. The analyst is
able to assess the figures in relation to total values.
Significance of Common-size Financial Statement:
 To present the changes in various items in relation to revenue from operations,

total assets or liabilities: One of the major drawbacks of comparative financial
statement is that they do not present the change in various items n relation to
revenue from operations, total assets or total equity and liabilities. This
drawback is removed through the preparation of commons-size statements.
 To establish a relationship: Over a period, a relationship is established

between various items of the statement of the profit and loss to revenue from
operations and various items of balance sheet to total assets or total liabilities.
 To provide for a common base for comparison: Common size financial
statements provide for a common base for comparison. Financial statements of
different firms can be converted into uniform common-size format irrespective
of the size of the individual items. Thus they facilitate the comparison of
profitability and financial position of two or more businesses over a period of
time.
 Helpful for Time Series Analysis: A Common-Size Statement helps an analyst

to find out a trend relating to percentage share of each asset in total assets and
percentage share of each liability in total liabilities.
Limitation of common-size financial statement.
 Different firms may adopt different accountingpractices. In that case, the

common ratios may not be directly comparable. In that case, adjustments will
have to be made in order to compare the common ratios.
 Different firms may adopt different accounting principles. The Even same firm
may adopt different accounting standards over a period of time. Thus,
adjustments will have to be made in order to compare the ratios.
Infosys
Infosys Limited is an Indian multinational corporationthat provides business
consulting, information technology and outsourcing services. It has its headquarters
in Bengaluru, Karnataka, India.
Infosys is the second-largest Indian IT company by 2017 revenues and 596th largest
public company in the world based on revenue.On March 29, 2019, its market
capitalisation was $46.52 billion.The credit rating of the company is A− (rating
by Standard & Poor's).
Conclusion
Our brief analysis of the comparative and common size financial statements, we are
able to use the comparative statement which shows the figures of various firms or
number of years side by side i.e. both for inter-firm comparison and intra-firm
comparison.
Whereas with the common size common-size Statement helps the users of financial
statement to make clear about the ratio or percentage of each individual item to total
assets/liabilities of a firm. Thus it presents the performance trend and the aspects
that is needed to be improved.
Bibliography
The information and used in the above project have been taken
from the following sources:-
 T.S. GREWAL’S MANAGEMENT ACCOUNTING
 By T.S. GREWAL, revised by H.S. GREWAL and C.A. (Dr.)

G.S. GREWAL.
 ISC ACCOUNTANCY BY D.K. GOYEL AND RAJESH

GOYEL
 www.google.com
Index
SL.N CONTENTS
O
INTRODUCTION
1.
COMPARATIVE FINANCIAL
2. STATEMENT
COMMON-SIZE FINANCIAL
3. STATEMENT
HINDUSTAN UNILEVER LIMITED
4.
FINANCIAL STATEMENT OF HUL
5.
COMCLUSION
6.
BIBLIOGRAPHY
7.
TOPIC: PREPARATION OF
COMPARATIVE AND
COMMON-SIZE
STATEMENT AND
BALANCE SHEET
NAME: DEBDUTTA
MITRA
CLASS: XII SECTION: B1
ROLL.NO: 10
ACCOUNTS PROJECT

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ACKNOWLEDGEMENT

I would like to express my special thanks of gratitude to my

Secondly I would also like to thank my parents and friends who

Tools for Financial Statement Analysis:

 Comparative Statements: Comparative Statement means a comparative study

 Common-size statement:Common-size Statement mean statements in which

 Cash Flow Statement: Cash Flow Statement is a statement showing flow of

 Ratio Analysis: Ratio is an arithmetical expression of relationship between two

Comparative financial statement

Significance of comparative financial statement:

 To Compare the Firm’s Performance with the Average Performance of the

 To Help in Forecasting: Comparative study of the changes in the key figures

Limitation of comparative financial statement:

Significance of Common-size Financial Statement:

 To present the changes in various items in relation to revenue from operations,

 To establish a relationship: Over a period, a relationship is established

 Helpful for Time Series Analysis: A Common-Size Statement helps an analyst

Limitation of common-size financial statement.

 Different firms may adopt different accountingpractices. In that case, the

 T.S. GREWAL’S MANAGEMENT ACCOUNTING

 By T.S. GREWAL, revised by H.S. GREWAL and C.A. (Dr.)

 ISC ACCOUNTANCY BY D.K. GOYEL AND RAJESH

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