subject: Specimen of Comparative and Common size P&L and B/S, and Ratio Analysis [print this page] COMPARATIVE INCOME STATEMENT COMPARATIVE INCOME STATEMENT
Particulars
Previous Year
Current Year
Increase or decrease
Amount
Percentage
Net Sales/ Sales (Gross sales Sales Returns)
Less: Cost of Goods Sold
Raw materials
Direct Wages/ Labor
Direct / Manufacturing expenses
Add: Opening stock of Finished Goods
Less: Closing stock of Finished Goods
Gross Profit
Less: Operating Expenses
Administration Expenses
Selling and Distribution Expenses
Operating Profit
Add: Non-trading/ Non-operating Income (dividend, interest etc)
Less: Non-trading/ Non-operating Expenses
Income or Earnings Before Interest and Tax
Less: Interest on Debentures/ Bonds
Net income of Earnings Before Tax
Less: Tax
Income or Profit After Tax
COMMONSIZE INCOME STATEMENT
Particulars
Previous Year
Current Year
Amount
Percentage
Amount
Percentage
Net Sales/ Sales (Gross sales Sales Returns)
Less: Cost of Goods Sold
Raw materials
Direct Wages/ Labor
Direct / Manufacturing expenses
Add: Opening stock of Finished Goods
Less: Closing stock of Finished Goods
Gross Profit
Less: Operating Expenses
Administration Expenses
Selling and Distribution Expenses
Operating Profit
Add: Non-trading/ Non-operating Income (dividend, interest etc)
Less: Non-trading/ Non-operating Expenses
Income or Earnings Before Interest and Tax
Less: Interest on Debentures/ Bonds
Net income of Earnings Before Tax
Less: Tax
Income or Profit After Tax
COMPARATIVE BALANCE SHEET
Particulars
Previous Year
Current Year
Increase or decrease
Amount
Percentage
ASSETS
Current Assets
Cash / Bank
Stock/ Inventory
Debtors
Bills Receivable
Prepaid Expenses
Total Current Assets (A)
Fixed Assets
Land & Buildings
Plant & Machinery
Furniture & Fittings
Total Fixed Assets (B)
Total Assets (A + B)
LIABILITIES
Current Liabilities & Provisions
Creditors
Bills Payable
Outstanding Expenses
Provisions
Total Current Liabilities (C)
Long Term Liabilities
Debentures/ Bonds/ Bank Loan
Total Long-Term Liabilities (D)
Capital and Reserves
Share Capital
Reserves and Surplus
Retained Earnings
Total Shareholders Funds (E)
Total liabilities and Capital(C+D+E)
Problem 1:
The following are the income statements of X Ltd., for the year ending 31.12.2008 and 2007. You are required to prepare a comparative income statement for the two years.
31.12.2007 31.12.2008
Net Sales 10,00,000 12,00,000
Cost of Goods Sold (CGS) 5,50,000 6,05,000
Operating expenses
Administration 80,000 1,00,000
Selling 60,000 80,000
Non-Operating Expenses
Interest 40,000 50,000
Income Tax 50,000 80,000
RATIO ANALYSIS
A ratio us a mathematical relationship between two items expressed in a quantitative form. Basically ratios can be classified as
Profitability ratio
Turnover ratio
Solvency ratio
PROFITABILITY RATIO
FORMULA
EXPLANATION
1. Return on Investment (or) Overall Profitability ratio
Operating Profit
R.O.I = ------------------------- x 100
Capital Employed
Operating Profit = Profit before interest and tax
Capital Employed = Total Assets (or) Total Fixed Assets (or) Net Working Capital (or) Share Capital + Reserves and Surplus + Long term Loans) (Non business assets Fictitious Assets)
a. Return on Shareholders Funds
Net Profit after interest and tax
R.O. SF = ------------------------------------------ x 100
Shareholders Funds
Net Profit after Interest and Tax = Profit after interest and tax + (Non-operating income non-operating expenses)
Shareholders Funds = Equity Share Capital + Preference Share Capital + Reserves and Surplus
b. Return on Equity/ Return on Net Worth/ Equity Shareholders Funds
Net profit after interest, tax and pref. dividend
ROE = ---------------------------------------------------------- x 100
Equity Shareholders Funds/ net worth/ Equity
Equity Shareholders Funds = Equity Share Capital + Reserves and Surplus Accumulated Losses
c. Return on Total Assets (2 FORMULA)
Net profit after tax + Interest
ROTA = ------------------------------------------------- x 100
Total Assets excluding Fictitious Assets
Net profit after tax
ROTA = ----------------------------- x 100
Total Assets
2. Gross Profit ratio
Gross profit
GP = ----------------------------- x 100
Net Sales
Net Sales = Gross Sales Sales Returns
3. Operating Ratio
Cost of Sales + Operating Expenses
Operating Ratio = --------------------------------------------- x 100
Net Sales
Operating Expenses = Cost of Goods Sold + Administrative expenses + Selling and Distribution Expenses
4. Operating Profit Ratio
Operating profit
OPR = ----------------------------- x 100
Sales
Operating Profit = Net Profit + Non-operating Expenses Non-operating incomes
(or)
Gross Profit Operating Expenses
5. Expenses Ratio
Admin./ Sell & Dis./ Financial expenses
ER = ------------------------------------------------------ x 100
Net Sales
Administration Expenses, Selling and Distribution Expenses and Financial Expenses
