Financial Statement Analysis

Through Comparative
Statements.
 NEED FOR FINANCIAL
ANALYSIS
To evaluate, Financial
Performance.

To evaluate, Financial position.

For Prediction of future

performance.

To evaluate, Operating Efficiency

of the firm.
COMPARATIVE FINANCIAL STATEMENTS
 Comparison ---> Compare
 How to compare?
Matching, the similarities and dissimilarities
 What do you need for comparing?
Two or more things, facts, persons etc
 What is the objective of comparison?
To ascertain the difference
 Why do we compare?
– To ascertain which is good / bad?
– To ascertain the favourable / unfavourable changes
– To ascertain the efficiency and effectiveness
 COMPARATIVE STATEMENTS ARE USED
FOR
 StatementsCOMPARISON
which summarise and present related accounting
data for a number of years incorporating therein the changes
(absolute or relative or both) in individual item.
 Figures of two or more period are placed side by side to facilitate
comparison.
 Tool used for analysing financial statements.
 Aims to study the a in individual items when compared to the
previous year.
 On the basis of the changes, valid conclusions on financial
condition and/or profitability, strengths and weaknesses etc., of
the firm.
 The changes can be shown either in absolute or relative terms or
both.
 Comparative financial statement
show:-
Accounting variables in their current and previous values
(values for comparison).
Changes (increase / decrease) in the values of
individual items.
Changes (increase / decrease) in percentages of the
individual items.
 Advantages of comparative
statements
• Facilitates for inter-firm and/or inter-period
comparisons
• Highlights upon the tends in different accounting
variables relating to performance, efficiency and
financial position
• Helps to identify weaknesses in operating efficiency,
financial conditions etc and to take appropriate
remedial actions
BALANCE
SHEET
 Analysis
 Comparative balance sheet reveals that Share capital is increasing up to 8.55% and other
equity up to 16.67%.
 There is a decrease in borrowings to 2.24%, which means the company is dependent on
external borrowings for paying off the debt.
 Property , plant and equipment is increasing to 1.7%.
 The inventories increased by 16.6%.
 Investment decreased up to 8.29% which means company is earning lower profits.
 Cash & cash equivalents increased 14.6% which means liquidity position of the company is
good and the debts have been paid off.
 There is a 14.2% difference in the percentage change of current assets and current
liabilities therefore we can say that the status of the company is good.
 Overall Financial position of the company is sound.
Thank you.

By- Shikhar Anand

BBA/3/M/A
Enrollment no.- 06017001718