E analysis across years ie vertical analysis comparing

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Unformatted text preview: ical Analysis: comparing figures from the financial statements of a single period is known as Vertical Analysis of 7 1. COMPARATIVE FINANCIAL STATEMENTS Comparative financial statements are statements of Comparative the financial position of a business so designed as to facilitate comparison of different accounting variables for drawing useful inferences for Comparative financial statements show: Absolute data for each of the periods stated Changes in absolute data in terms of rupees Changes in absolute data in percentages Ratios Percentage to totals a) b) c) d) e) 8 PARTICULARS NET SALES NET LESS: COST OF GOODS SOLD COST OPENING STOCK ADD:PURCHASES WAGES FACTORY EXPENSES LESS: CLOSING STOCK COST OF GOODS SOLD GROSS PROFIT LESS: OPERATING EXPENSES 1. ADMIN EXPENSES 2. SELLING & SELLING DISTRIBUTION EXP. DISTRIBUTION 3. FINANCE EXP. TOTAL OPERATING EXP. Y1 Y1 (Rs) (Rs) Y2 Y2 (Rs) (Rs) CHANGE CHANGE IN AMT IN (Rs) Y2-Y1 CHANGE IN CHANGE PERCENPERCENTAGE Y2-Y1 *100 Y2-Y1 *100 Y1 Y1 600 1,000 400 66.67 80 300 100 80 560 120 440 160 120 800 160 100 1180 300 880 120 40 500 60 20 620 180 440 (40) 50 166.66 60 25 110.7 150 100 (25) 18 22 4 22.22 33 1 52 23 45 (10) (1) (7) (30.30) (100) (13.46) 9 Advantages Indicates Indicates the direction of movement and the financial position of the company. the Used to compare the position of the every Used month or every quarter. month Used to compare with other firms. Presents a review of the past activities and Presents their effect on the financial position. their Helps to determine the nature of trends of Helps current changes affecting the enterprise. current 10 Disadvantages Loose Loose their purpose if the application o...
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