Commerce Exam > Commerce Notes > Crash Course of Accountancy - Class 12 > Introduction - Common Size Statements
Introduction - Common Size Statements | Crash Course of Accountancy - Class 12 - Commerce PDF Download
| Download, print and study this document offline |
Please wait while the PDF view is loading
Page 1
MEANING OF COMMON SIZE STATEMENTS
Common Size Financial Statements are the statements in which amounts of individual items of Balance Sheet and
Statement of Profit and Loss for two or more years are written. These amounts are further converted into percentages to
some common base.
• Percentage of each individual item shows its relation to its respective total.
• This analysis is also known as 'Vertical Analysis'.
• Common Size statements express all items of a financial statement as a percentage of some common base such as
Revenue from Operations for Statement of Profit and Loss and total assets and total liabilities for Balance Sheet.
COMMON SIZE BALANCE SHEETS
Common Size Balance Sheet is a statement in which each asset is expressed as percentage to Total Assets and each
liability is expressed as percentage to Total Equity and Liabilities. Total Assets or Total Equity and Liabilities are taken as
100 and all the figures are expressed as percentage of the total.
Objectives of Common Size Balance Sheet
• To analyse changes in individual items of balance sheet.
• To establish the trend of different items of assets, equity and liabilities.
• To assess the financial soundness and financial strategy.
Format of Common Size Balance Sheet
COMMON SIZE BALANCE SHEET as at....
Particulars Not
e
No.
Absolute Amounts Percentage of Balance
Sheet Total
Previous
Year (Rs.)
Current
Year (Rs.)
Previous
Year (%)
Current
Year(%)
I. EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital ... ... ... ...
(b) Reserves and Surplus ... ... ... ...
2. Non-Current Liabilities
(a) Long-term Borrowings ... ... ... ...
(b) Long-term Provisions ... ... ... ...
3. Current – Liabilities
(a) Short-term Borrowings ... ... ... ...
(b) Trade Payables ... ... ... ...
(c) Other Current Liabilities ... ... ... ...
(d) Short-term Provisions ... ... ... ...
Total 100 100
II. ASSETS
1. Non-Current Assets
(a) Fixed Assets
(i) Tangible Assets ... ... ...... ...
(ii) Intangible Assets ... ... ... ...
(b) Non-Current Investments ... ... ... ...
(c) Long-term Loans and Advances ... ... ... ...
2. Current Assets
(a) Current Investments ... ... ... ...
(b) Inventories ... ... ... ...
(c) Trade Receivables ... ... ... ...
(d) Cash and Cash Equivalents ... ... ... ...
(e) Short-term Loan and Advances ... ... ... ...
(f) Other Current Assets ... ... ... ...
Page 2
MEANING OF COMMON SIZE STATEMENTS
Common Size Financial Statements are the statements in which amounts of individual items of Balance Sheet and
Statement of Profit and Loss for two or more years are written. These amounts are further converted into percentages to
some common base.
• Percentage of each individual item shows its relation to its respective total.
• This analysis is also known as 'Vertical Analysis'.
• Common Size statements express all items of a financial statement as a percentage of some common base such as
Revenue from Operations for Statement of Profit and Loss and total assets and total liabilities for Balance Sheet.
COMMON SIZE BALANCE SHEETS
Common Size Balance Sheet is a statement in which each asset is expressed as percentage to Total Assets and each
liability is expressed as percentage to Total Equity and Liabilities. Total Assets or Total Equity and Liabilities are taken as
100 and all the figures are expressed as percentage of the total.
Objectives of Common Size Balance Sheet
• To analyse changes in individual items of balance sheet.
• To establish the trend of different items of assets, equity and liabilities.
• To assess the financial soundness and financial strategy.
Format of Common Size Balance Sheet
COMMON SIZE BALANCE SHEET as at....
Particulars Not
e
No.
Absolute Amounts Percentage of Balance
Sheet Total
Previous
Year (Rs.)
Current
Year (Rs.)
Previous
Year (%)
Current
Year(%)
I. EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital ... ... ... ...
(b) Reserves and Surplus ... ... ... ...
2. Non-Current Liabilities
(a) Long-term Borrowings ... ... ... ...
(b) Long-term Provisions ... ... ... ...
3. Current – Liabilities
(a) Short-term Borrowings ... ... ... ...
(b) Trade Payables ... ... ... ...
(c) Other Current Liabilities ... ... ... ...
(d) Short-term Provisions ... ... ... ...
Total 100 100
II. ASSETS
1. Non-Current Assets
(a) Fixed Assets
(i) Tangible Assets ... ... ...... ...
(ii) Intangible Assets ... ... ... ...
(b) Non-Current Investments ... ... ... ...
(c) Long-term Loans and Advances ... ... ... ...
2. Current Assets
(a) Current Investments ... ... ... ...
(b) Inventories ... ... ... ...
(c) Trade Receivables ... ... ... ...
(d) Cash and Cash Equivalents ... ... ... ...
(e) Short-term Loan and Advances ... ... ... ...
(f) Other Current Assets ... ... ... ...
Total 100 100
P.Y (%)= . X 100
Total of assets or liabilties of p.y.
C.Y (%)= . X 100
Total of assets or liabilties of C.y.
COMMON SIZE STATEMENT OF PROFIT AND LOSS
In Common Size Statement of Profit and Loss, Revenue from Operations (Net Sales) is taken as 100 and all other variables
of income statement are expressed as percentage of Revenue from Operations.
• It helps to determine the relationship between Revenue from Operations and other expenses.
• It may be prepared either for different periods or for two firms.
Objectives of Common Size Statement of Profit and Loss
(i) To establish relationship among various components of Statement of Profit and Loss with revenue from operations.
(ii) To study the trend in different items of Incomes and Expenses.
(iii) To assess the efficiency.
Format of Common Size Statement of Profit and Loss
COMMON SIZE STATEMENT OF PROFIT AND LOSS
for the years ended.... and....
Particulars Note No. Absolute Change Percentage of
Revenue from
Operation
Previous
Year(Rs.)
Current Year
(Rs.)
Previous Year(%) Current Year(%)
I. Revenue from Operations 100 100
II. Other Income .... .... .... ....
III. Total Revenue (I + II) .... .... .... ....
IV. Expenses
(a) Cost of Materials Consumed .... .... .... ....
(b) Purchases of Stock-in-Trade .... .... .... ....
(c) Changes in Inventories of Finished Goods, .... .... .... ....
Work-in-Progress and Stock-in-Trade .... .... .... ....
(d) Employees Benefit Expenses .... .... .... ....
(e) Finance Costs .... .... .... ....
(f) Depreciation and Amortisation Expenses .... .... .... ....
(g) Other Expenses .... .... .... ....
V. Total Expenses .... ....
VI. Profit before Tax (III-V) .... .... .... .... ....
Less: Tax .... .... .... .... ....
VII. Profit after Tax .... .... .... .... ....
P.Y (%)= . X 100
Revenue from operations of p.y.
C.Y (%)= . X 100
Revenue from operations of C.y.
Read More
|
79 docs|41 tests
|
FAQs on Introduction - Common Size Statements - Crash Course of Accountancy - Class 12 - Commerce
| 1. What are common size statements in commerce? |  |
Common size statements in commerce are financial statements that present the financial figures as a percentage of a base figure. This base figure is usually the total revenue or sales of the company. It allows for easy comparison across different periods or between different companies, as it helps in analyzing the relative proportion of each financial item.
| 2. How are common size statements useful in analyzing a company's financial performance? | |
Common size statements provide valuable insights into a company's financial performance by highlighting the relative importance of different financial items. It helps in identifying trends, comparing performance over time, and benchmarking against industry peers. For example, it can show if a company's expenses are increasing at a faster rate than its revenue, indicating potential inefficiencies in cost management.
| 3. Can common size statements be used to compare financial performance across different companies? | |
Yes, common size statements are particularly useful for comparing financial performance across different companies. By presenting financial figures as a percentage of a common base figure, such as total revenue, it eliminates the impact of differences in company size and allows for a more meaningful comparison. This is especially important when analyzing companies operating in the same industry.
| 4. How can common size statements help in identifying financial strengths and weaknesses of a company? | |
Common size statements can help in identifying financial strengths and weaknesses of a company by highlighting areas of concern. For example, if a company's cost of goods sold (COGS) is significantly higher than its industry peers, it may indicate inefficiencies in procurement or production processes. On the other hand, if a company's operating profit margin is higher than its competitors, it may indicate strong pricing power or cost control measures.
| 5. What are the limitations of using common size statements in financial analysis? | |
While common size statements are helpful, they do have some limitations. Firstly, they only provide a snapshot of the financial position at a specific point in time and may not capture the dynamics of a business over time. Secondly, they rely on accurate and reliable financial data, which may not always be available. Lastly, they may not capture qualitative factors or non-financial indicators that are important for a comprehensive analysis of a company's performance.
Related Exams
About this Document
|
4.96/5 Rating |
|
Nov 23, 2024 Last updated |
Document Description: Introduction - Common Size Statements for Commerce 2024 is part of Crash Course of Accountancy - Class 12 preparation.
The notes and questions for Introduction - Common Size Statements have been prepared according to the Commerce exam syllabus. Information about Introduction - Common Size Statements covers topics
like and Introduction - Common Size Statements Example, for Commerce 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises and tests below for Introduction - Common Size Statements.
Introduction of Introduction - Common Size Statements in English is available as part of our Crash Course of Accountancy - Class 12
for Commerce & Introduction - Common Size Statements in Hindi for Crash Course of Accountancy - Class 12 course.
Download more important topics related with notes, lectures and mock test series for Commerce
Exam by signing up for free. Commerce: Introduction - Common Size Statements | Crash Course of Accountancy - Class 12 - Commerce
Description
Full syllabus notes, lecture & questions for Introduction - Common Size Statements | Crash Course of Accountancy - Class 12 - Commerce - Commerce | Plus excerises question with solution to help you revise complete syllabus for Crash Course of Accountancy - Class 12 | Best notes, free PDF download
Information about Introduction - Common Size Statements
In this doc you can find the meaning of Introduction - Common Size Statements defined & explained in the simplest way possible. Besides explaining types of
Introduction - Common Size Statements theory, EduRev gives you an ample number of questions to practice Introduction - Common Size Statements tests, examples and also practice Commerce
tests
|
Explore Courses for Commerce exam
|
|
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
Related Searches
Previous Year Questions with Solutions
,video lectures
,Summary
,Semester Notes
,ppt
,Introduction - Common Size Statements | Crash Course of Accountancy - Class 12 - Commerce
,Free
,MCQs
,past year papers
,Objective type Questions
,shortcuts and tricks
,Viva Questions
,Introduction - Common Size Statements | Crash Course of Accountancy - Class 12 - Commerce
,Extra Questions
,Important questions
,Exam
,Introduction - Common Size Statements | Crash Course of Accountancy - Class 12 - Commerce
,practice quizzes
,Sample Paper
,study material
,mock tests for examination
;
Additional Information about Introduction - Common Size Statements for Commerce Preparation
Introduction - Common Size Statements Free PDF Download
The Introduction - Common Size Statements is an invaluable resource that delves deep into the core of the Commerce exam.
These study notes are curated by experts and cover all the essential topics and concepts, making your preparation more efficient and effective.
With the help of these notes, you can grasp complex subjects quickly, revise important points easily,
and reinforce your understanding of key concepts. The study notes are presented in a concise and easy-to-understand manner,
allowing you to optimize your learning process. Whether you're looking for best-recommended books, sample papers, study material,
or toppers' notes, this PDF has got you covered. Download the Introduction - Common Size Statements now and kickstart your journey towards success in the Commerce exam.
Importance of Introduction - Common Size Statements
The importance of Introduction - Common Size Statements cannot be overstated, especially for Commerce aspirants.
This document holds the key to success in the Commerce exam.
It offers a detailed understanding of the concept, providing invaluable insights into the topic.
By knowing the concepts well in advance, students can plan their preparation effectively.
Utilize this indispensable guide for a well-rounded preparation and achieve your desired results.
Introduction - Common Size Statements Notes
Introduction - Common Size Statements Notes offer in-depth insights into the specific topic to help you master it with ease.
This comprehensive document covers all aspects related to Introduction - Common Size Statements.
It includes detailed information about the exam syllabus, recommended books, and study materials for a well-rounded preparation.
Practice papers and question papers enable you to assess your progress effectively.
Additionally, the paper analysis provides valuable tips for tackling the exam strategically.
Access to Toppers' notes gives you an edge in understanding complex concepts.
Whether you're a beginner or aiming for advanced proficiency, Introduction - Common Size Statements Notes on EduRev are your ultimate resource for success.
Introduction - Common Size Statements Commerce Questions
The "Introduction - Common Size Statements Commerce Questions" guide is a valuable resource for all aspiring students preparing for the
Commerce exam. It focuses on providing a wide range of practice questions to help students gauge
their understanding of the exam topics. These questions cover the entire syllabus, ensuring comprehensive preparation.
The guide includes previous years' question papers for students to familiarize themselves with the exam's format and difficulty level.
Additionally, it offers subject-specific question banks, allowing students to focus on weak areas and improve their performance.
Study Introduction - Common Size Statements on the App
Students of Commerce can study Introduction - Common Size Statements alongwith tests & analysis from the EduRev app,
which will help them while preparing for their exam. Apart from the Introduction - Common Size Statements,
students can also utilize the EduRev App for other study materials such as previous year question papers, syllabus, important questions, etc.
The EduRev App will make your learning easier as you can access it from anywhere you want.
The content of Introduction - Common Size Statements is prepared as per the latest Commerce syllabus.
|
© EduRev
|
Education Revolution
|
Follow Us
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup