Common Size Statement of Assets & Liabilities

Common Size Balance Sheet
A common size balance sheet shows the percentage in relation to each item of assets to total assets and each item of liabilities to total liabilities and capital.

A comparative common size balance sheet for different periods helps to understand the trends and reasons for changes in different items.

1. MANAGEMENT ACCOUNTING Financial Analysis and Interpretation : Common Size Financial Statement Analysis Problems 1 By: Smt.UMA MINAJIGI REUR HEAD, DEPT. OF COMMERCE & Management Smt. V G Degree College for Women, Kalaburagi

2. MANAGEMENT ACCOUNTING B.COM SIXTH SEMESTER & BBA FOURTH SEMESTER 6.3: PRINCIPLES OF MANAGEMENT ACCOUNTING

3. Unit II : Financial Statements : Nature, uses and limitations. Analysis and interpretations – meaning, procedure, objectives, and importance. Comparative statement, Common Size Statements and Trend Analysis - practical problems.

4. MANAGEMENT ACCOUNTING Financial Analysis and Interpretation : Comparative Financial Statement Analysis Common Size Statement of Assets & Liabilities -- Solved Problems

5. Common Size Financial Statement Analysis Common Size Financial Statements When the financial statement, financial data are shown in the shape of vertical percentage are known as Common Size Statements. In these statements, all figures are converted into a common unit by expressing them as percentage of a key figures in the statement. The figures are shown as percentage of total assets, total liabilities and total sales. The analyst is able to assess the figures in relation to total values.

6. Common Size Financial Statement Analysis Common size statements may be prepared in the following way: Total assets or liabilities are taken as 100. Individual assets are expressed as percentage of total assets i.e , 100 and different liabilities are calculated in relation to total liabilities. Common Size Statements are those statements in which figures reported for the period are converted into percentage or ratios of a total item. Types of Common Size Statements Common Size Income Statement Common Size Balance Sheet.

7. Common Size Income Statement Analysis Common Size Income Statement In common Size income statement, the sales figures are taken to be 100% and all other items of cost of goods sold or cost of sales are expressed as a percentage of sales. A comparative common size income statement for two or more periods helps to ascertain the efficiency.

8. Common Size Balance Sheet Common Size Balance Sheet A common size balance sheet shows the percentage in relation to each item of assets to total assets and each item of liabilities to total liabilities and capital. A comparative common size balance sheet for different periods helps to understand the trends and reasons for changes in different items.

9. Common Size Balance Sheet Common Size Statement of Assets & Liabilities Solved Problems

10. Format : Comparative Statement of Assets & Liabilities Particulars 31-12-2019 31-12-2020   Amount Percentage Amount Percentage I. Equity & Liabilities     Shareholders fund Share Capital 6,00,000 8,00,000 Reserves & Surplus 1,40,000 2,36,000 Total Shareholders funds (A) 7,40,000 10,36,000 2. Non-Current Liabilities Long Term Borrowings 3,00,000 2,00,000 Total Non-Current Liabilities (B) 3,00,000 2,00,000 3. Current Liabilities Trade Payables 1,50,000 1,98,000 Short Term provisions 1,64,000 2,00,000 Total Current Liabilities (C) 3,14,000 3,98,000 Total (A+B+C) 13,54,000 100 16,34,000 100 II. Assets 1. Non-Current Assets a. Fixed Assets Tangible Assets 5,60,000 7,40,000 Intangible Assets 2,30,000 1,80,000 Total Non-Current Assets (D) 7,90,000 9,20,000 2. Current Assets Inventories 1,54,000 2,18,000 Trade receivables 3,60,000 4,60,000 Cash & Cash Equivalents 50,000 36,000 Total Current Assets (E) 5,64,000 7,14,000 Total Assets (D+E) 13,54,000 100 16,34,000 100

11. Illustration 1: The following are the statement of Assets and Liabilities of a concern as on 31-12-2019 and 2020. Particulars 31-12-2019 31-12-2020   Amount Amount Amount Amount I. Equity & Liabilities         Shareholders fund Share Capital 6,00,000 8,00,000 Reserves & Surplus 1,40,000 7,40,000 2,36,000 10,36,000 2. Non-Current Liabilities Long Term Borrowings 3,00,000 2,00,000 3. Current Liabilities Trade Payables 1,50,000 1,98,000 Short Term provisions 1,64,000 3,14,000 2,00,000 3,98,000 Total 13,54,000 16,34,000 II. Assets 1. Non-Current Assets a. Fixed Assets Tangible Assets 5,60,000 7,40,000 Intangible Assets 2,30,000 7,90,000 1,80,000 9,20,000 2. Current Assets Inventories 1,54,000 2,18,000 Trade receivables 3,60,000 4,60,000 Cash & Cash Equivalents 50,000 5,64,000 36,000 7,14,000 Total 13,54,000 16,34,000

12. Notes to Accounts Particulars 31-12-2019 31-12-2020   Amount Amount Note 1: Share Capital 6,00,000  8,00,000  Share Capital 6,00,000  8,00,000  Note 2: Reserves & Surplus General Reserves 80,000 1,40,000 Profit & Loss 60,000 96,000 Reserves & Surplus 1,40,000 2,36,000 Note 3: Long Term Borrowings 6% Debentures 3,00,000 2,00,000 Long Term Borrowings 3,00,000 2,00,000 Note 4: Trade Payable Sundry Creditors 1,10,000 1,66,000 Bills Payable 40,000 32,000 Trade Payable 1,50,000 1,98,000 Note 5: Short Term Provisions     Provision for Taxation 80,000 1,00,000 Proposed Dividend 84,000 1,00,000 Short Term Provisions 1,64,000 2,00,000

13. Particulars 31-12-2019 31-12-2020   Amount Amount Note 6: Tangible Assets     Machinery 1,60,000 4,00,000 Building 4,00,000 3,40,000 Tangible Assets  5,60,000  7,40,000 Note 7: Intangible Assets Goodwill 2,30,000 1,80,000 Intangible Assets 2,30,000 1,80,000 Note 8: Inventories Stock 1,54,000 2,18,000 Inventories 1,54,000 2,18,000 Note 9: Trade Receivables Sundry Debtors 3,20,000 4,00,000 Bills Receivables 40,000 60,000 Trade Receivables 3,60,000 4,60,000 Note 10: Cash & Cash Equivalents     Cash  50,000 36,000 Cash & Cash Equivalents 50,000 36,000 Prepare a Common Size Statement of Assets & Liabilities of the concern and comment on the financial position of the company.

14. Solution : Common Size Statement of Assets & Liabilities Particulars 31-12-2019 31-12-2020   Amount Percentage Amount Percentage

15. Solution : Common Size Statement of Assets & Liabilities Particulars 31-12-2019 31-12-2020   Amount Percentage Amount Percentage I. Equity & Liabilities     Shareholders fund Share Capital 6,00,000 8,00,000 Reserves & Surplus 1,40,000 2,36,000 Total Shareholders funds (A) 7,40,000 10,36,000 2. Non-Current Liabilities Long Term Borrowings 3,00,000 2,00,000 Total Non-Current Liabilities (B) 3,00,000 2,00,000 3. Current Liabilities Trade Payables 1,50,000 1,98,000 Short Term provisions 1,64,000 2,00,000 Total Current Liabilities (C) 3,14,000 3,98,000 Total (A+B+C) 13,54,000 100 16,34,000 100 II. Assets 1. Non-Current Assets a. Fixed Assets Tangible Assets 5,60,000 7,40,000 Intangible Assets 2,30,000 1,80,000 Total Non-Current Assets (D) 7,90,000 9,20,000 2. Current Assets Inventories 1,54,000 2,18,000 Trade receivables 3,60,000 4,60,000 Cash & Cash Equivalents 50,000 36,000 Total Current Assets (E) 5,64,000 7,14,000 Total Assets (D+E) 13,54,000 100 16,34,000 100 Particulars 31-12-2019 31-12-2020   Amount Amount Amount Amount I. Equity & Liabilities         Shareholders fund Share Capital 6,00,000 8,00,000 Reserves & Surplus 1,40,000 7,40,000 2,36,000 10,36,000 2. Non-Current Liabilities Long Term Borrowings 3,00,000 2,00,000 3. Current Liabilities Trade Payables 1,50,000 1,98,000 Short Term provisions 1,64,000 3,14,000 2,00,000 3,98,000 Total 13,54,000 16,34,000 II. Assets 1. Non-Current Assets a. Fixed Assets Tangible Assets 5,60,000 7,40,000 Intangible Assets 2,30,000 7,90,000 1,80,000 9,20,000 2. Current Assets Inventories 1,54,000 2,18,000 Trade receivables 3,60,000 4,60,000 Cash & Cash Equivalents 50,000 5,64,000 36,000 7,14,000 Total 13,54,000 16,34,000

16. Solution : Common Size Statement of Assets & Liabilities Particulars 31-12-2019 31-12-2020   Amount Percentage Amount Percentage I. Equity & Liabilities     Shareholders fund Share Capital 6,00,000 8,00,000 Reserves & Surplus 1,40,000 2,36,000 Total Shareholders funds (A) 7,40,000 10,36,000 2. Non-Current Liabilities Long Term Borrowings 3,00,000 2,00,000 Total Non-Current Liabilities (B) 3,00,000 2,00,000 3. Current Liabilities Trade Payables 1,50,000 1,98,000 Short Term provisions 1,64,000 2,00,000 Total Current Liabilities (C) 3,14,000 3,98,000 Total (A+B+C) 13,54,000 100 16,34,000 100 II. Assets 1. Non-Current Assets a. Fixed Assets Tangible Assets 5,60,000 7,40,000 Intangible Assets 2,30,000 1,80,000 Total Non-Current Assets (D) 7,90,000 9,20,000 2. Current Assets Inventories 1,54,000 2,18,000 Trade receivables 3,60,000 4,60,000 Cash & Cash Equivalents 50,000 36,000 Total Current Assets (E) 5,64,000 7,14,000 Total Assets (D+E) 13,54,000 100 16,34,000 100

17. Solution : Common Size Statement of Assets & Liabilities Particulars 31-12-2019 31-12-2020   Amount Percentage Amount Percentage I. Equity & Liabilities     Shareholders fund Share Capital 6,00,000 44.31 8,00,000 48.96 Reserves & Surplus 1,40,000 10.34 2,36,000 14.44 Total Shareholders funds (A) 7,40,000 54.65 10,36,000 63.40 2. Non-Current Liabilities     Long Term Borrowings 3,00,000 22.16 2,00,000 12.24 Total Non-Current Liabilities (B) 3,00,000 22.16 2,00,000 12.24 3. Current Liabilities     Trade Payables 1,50,000 11.08 1,98,000 12.12 Short Term provisions 1,64,000 12.11 2,00,000 12.24 Total Current Liabilities (C) 3,14,000 23.19 3,98,000 24.36 Total (A+B+C) 13,54,000 100 16,34,000 100 2019 2020 = 600000/1354000 * 100 = 44.31 = 800000/1634000 * 100 = 48.96 = 140000/1354000 * 100 = 10.34 = 236000/1634000 * 100 = 14.44 = 740000/1354000 * 100 = 54.65 = 1036000/1634000 * 100 = 63.40 = 300000/1354000 * 100 = 22.16 = 200000/1634000 * 100 = 12.24 = 150000/1354000 * 100 = 11.08 = 198000/1634000 * 100 = 12.12 = 164000/1354000 * 100 = 12.11 = 200000/1634000 * 100 = 12.24 = 314000/1354000 * 100 = 23.19 = 398000/1634000 * 100 = 24.36 Calculation of Percentage to Equity & Liabilities = Concerned item X 100 Total Equity & Lability

18. Solution: Working Notes: Calculation of Percentage to Equity & Liabilities = Concerned item X 100 Total Equity & Lability 1. Percentage of Share Capital to Equity & Libilities = Share Capital X 100 Total Equity & Lability 2019 = 6,00,000 X 100 = 44.31% 13,54,000 2020 = 8,00,000 X 100 = 48.95% 16,34,000

19. Solution : Common Size Statement of Assets & Liabilities 2019 2020 = 560000/1354000 * 100 = 41.36 = 740000/1634000 * 100 = 45.29 = 230000/1354000 * 100 = 16.99 = 180000/1634000 * 100 = 11.02 = 790000/1354000 * 100 = 58.35 = 920000/1634000 * 100 = 56.30 = 154000/1354000 * 100 = 11.37 = 218000/1634000 * 100 = 13.34 = 360000/1354000 * 100 = 26.59 = 460000/1634000 * 100 = 28.15 = 50000/1354000 * 100 = 3.69 = 36000/1634000 * 100 = 2.20 = 564000/1354000 * 100 = 41.65 = 714000/1634000 * 100 = 43.70 Calculation of Percentage to Assets = Concerned item X 100 Total Assets II. Assets 1. Non-Current Assets a. Fixed Assets Tangible Assets 5,60,000 41.36 7,40,000 45.29 Intangible Assets 2,30,000 16.99 1,80,000 11.02 Total Non-Current Assets (D) 7,90,000 58.35 9,20,000 56.30 2. Current Assets     Inventories 1,54,000 11.37 2,18,000 13.34 Trade receivables 3,60,000 26.59 4,60,000 28.15 Cash & Cash Equivalents 50,000 3.69 36,000 2.20 Total Current Assets (E) 5,64,000 41.65 7,14,000 43.70 Total Assets (D+E) 13,54,000 100 16,34,000 100

20. Solution: Working Notes: Calculation of Percentage to Assets= Concerned item X 100 Total Assets 1. Percentage of Tangible Assets to Total Assets = Tangible Assets X 100 Total Assets 2019 = 5,60,000 X 100 = 41.36% 13,54,000 2020 = 7,40,000 X 100 = 45.29% 16,34,000

21. Solution : Common Size Statement of Assets & Liabilities Particulars 31-12-2019 31-12-2020   Amount Percentage Amount Percentage I. Equity & Liabilities     Shareholders fund Share Capital 6,00,000 44.31 8,00,000 48.96 Reserves & Surplus 1,40,000 10.34 2,36,000 14.44 Total Shareholders funds (A) 7,40,000 54.65 10,36,000 63.40 2. Non-Current Liabilities     Long Term Borrowings 3,00,000 22.16 2,00,000 12.24 Total Non-Current Liabilities (B) 3,00,000 22.16 2,00,000 12.24 3. Current Liabilities     Trade Payables 1,50,000 11.08 1,98,000 12.12 Short Term provisions 1,64,000 12.11 2,00,000 12.24 Total Current Liabilities (C) 3,14,000 23.19 3,98,000 24.36 Total (A+B+C) 13,54,000 100 16,34,000 100 II. Assets 1. Non-Current Assets a. Fixed Assets Tangible Assets 5,60,000 41.36 7,40,000 45.29 Intangible Assets 2,30,000 16.99 1,80,000 11.02 Total Non-Current Assets (D) 7,90,000 58.35 9,20,000 56.30 2. Current Assets     Inventories 1,54,000 11.37 2,18,000 13.34 Trade receivables 3,60,000 26.59 4,60,000 28.15 Cash & Cash Equivalents 50,000 3.69 36,000 2.20 Total Current Assets (E) 5,64,000 41.65 7,14,000 43.70 Total Assets (D+E) 13,54,000 100 16,34,000 100

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