Common size stetement

Meaning
Purpose or utility of common size statement
Common Size Balance sheet
Purpose of common size balance sheet
Format of common size balance sheet
Illustration
Exercise
Common Size Statement of profit & loss
Purpose of common size statement of profit & loss
Format of common size statement of profit & loss
Illustration
Exercise

1. School Of Commerce & Management CAREER POINT UNIVERSITY

2. Acknowledgement I would like to express my special thanks of gratitude to my teacher ( Pragya Bhargav Ma’am (my mentor); Assistant professor ; school of commerce & management ) who gave me the golden opportunity to do this wonderful project on the topic ( Common size statement ), which also helped me in doing a lot of Research and I came to know about so many new things I am really thankful to them. Secondly I would also like to thank my parents who helped me a lot in finalizing this project within the limited time frame.

3. Common size statement

4. Content : Meaning Purpose or utility of common size statement Common Size Balance sheet Purpose of common size balance sheet Format of common size balance sheet Illustration Exercise Common Size Statement of profit & loss Purpose of common size statement of profit & loss Format of common size statement of profit & loss Illustration Exercise

5. Meaning :- Common size statement are those in which individual figures are converted into percentages to some common base.

6. Purpose or utility of common size statement To present the change in various items in relation to revenue from operations, total assets or total liabilities. To establish a relationship between various items of statement of profit & loss and balance sheet. To provide for a common base for comparison.

7. Common Size Balance sheet A common size balance sheet is a statement in which total of assets or equity & liabilities is assumed to be equal to 100 and all the figures are expressed as percentage of the total.

8. Purpose of common size balance sheet To analyse changes in individual items of balance sheet. To establish the trend in various items of assets and liabilities. To assess the financial strategy adopted by different enterprises belonging to the same industry.

9. Format of common size balance sheet It consists of five column: 1 st column = items of balance sheet 2 nd column = pervious year data 3 rd column = current year data 4 th column = percentage of different items of previous year 5 th column = percentage of different items of current year

10. Common Size Balance Sheet of ……… As at ……….&……. Particulars Note no. Absolute amounts ₹ Percentage of Balance sheet total % Previous year Current year Previous year Current year I. Equity & Liabilities : (1) Shareholder’s Funds - a. Share capital b. Reserves & 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

11. d. Short term provisions Total II. Assets (1) Non current assets - a. Fixed assets (i). Tangible assets (ii). Intangible assets b. Non-current Investments c. Long-term loans & advances (2) Current assets - a. Current investments b. Inventories c. Trade receivables d. Cash & Cash equivalents e. Short-term loans & advances f. Other Current assets Total Continue………

12. Illustration : 1. Prepare a common size balance sheet, from the following information : Particulars Note no. 31-3-16 ₹ 31-3-15 ₹ Equity Share capital 16,00,000 16,00,000 Preference Share Capital 2,00,000 2,00,000 Reserves & Surplus 5,40,000 4,00,000 Non-Current liabilities 14,40,000 14,00,000 Current liabilities 7,20,000 4,00,000 Non-Current assets 30,60,000 28,00,000 Current assets 14,40,000 12,00,000 Note :- if in any question the proper balance sheet is not given so first prepare the balance sheet then solve the question.

13. Sol… Balance Sheet as at 31-3-15 & 31-3-16 Particulars Note no. 31-3-16 ₹ 31-3-15 ₹ I. Equity & Liabilities : (1) Shareholder’s Funds a. Share capital 18,00,000 18,00,000 b. Reserves & surplus 5,40,000 4,00,000 (2) Non-Current liabilities 14,40,000 14,00,000 (3) Current liabilities 7,20,000 4,00,000 Total 45,00,000 40,00,000 II. Assets : (1) Non-current assets 30,60,000 28,00,000 (2) Current assets 14,40,000 12,00,000 Total 45,00,000 40,00,000

14. Particulars Note no. Absolute amounts ₹ Percentage of balance sheet total % 31-3-15 31-3-16 31-3-15 31-3-16 I. Equity & Liabilities : (1) Shareholder’s Funds a. Share capital 18,00,000 18,00,000 45%* 40%* b. Reserves & surplus 4,00,000 5,40,000 10% 12% (2) Non-Current liabilities 14,00,000 14,40,000 35% 32% (3) Current liabilities 4,00,000 7,20,000 10% 16% Total 40,00,000 45,00,000 100% 100% II. Assets : (1) Non-current assets 28,00,000 30,60,000 70% 68% (2) Current assets 12,00,000 14,40,000 30% 32% Total 40,00,000 45,00,000 100% 100% Common Size balance Sheet As at 31 st march 2015 & 2016

15. Working note : i). × 100 = 45% ii). 100 = 40% and so on………..  

16. Exercise (Do It Yourself) Prepare a common size balance sheet of L Ltd. Particulars Note no. 31-12-16 ₹ 31-12-17 ₹ I. Equity & Liabilities : (1) Shareholder’s Funds 3,00,000 2,00,000 (2) Non-current liabilities 1,00,000 1,00,000 (3) Current liabilities 20,000 10,000 Total 4,20,000 3,10,000 II. Assets : (1) Non-current assets 3,20,000 2,20,000 (2) Current assets 1,00,000 90,000 Total 4,20,000 3,10,000

17. Common Size Statement of Profit & Loss A common size statement of profit & loss is a statement in which the figures of revenue from operations is assumed to be equal to 100 and all other figures are expressed as percentage of revenue from operations .

18. Purpose of common Size statement of profit 7 loss: To establish a relationship between individual items of statement of profit & loss and revenue from operations. To analyse changes in individual items of statement of profit & loss in relationship to revenue from operations. To judge the relative efficiency of cost items of the two or more firms belonging to the same industry.

19. Format of common size statement of profit & loss It consists of five column: 1 st column = items of statement of profit & loss 2 nd column = pervious year data 3 rd column = current year data 4 th column = percentage of different items of previous year 5 th column = percentage of different items of current year

20. Common Size Statement of profit & loss For the year ended ……..&……… Particulars Note no. Absolute Amounts ₹ Percentage of revenue from operation % Pervious year Current year Previous year Current year I. Revenue from operation II. Add : Other income III. Total revenue (I + II) IV. Less : Expenses – cost of materials consumed purchase of stock -in-trade change in inventories of F.G., WIP, stock-in-trade employee benefit expenses finance costs

21. Continue……. depreciation and amortization exp. other expenses Total expenses V. Profit before tax (III – IV) VI. Less : Tax VII. Profit after tax (V - VI)

22. Illustration : Prepare common size statement of profit & loss: Statement of profit & loss For the year ended …….&…… Particulars Note no. 31-12-14 ₹ 31-12-13 ₹ I. Revenue from operation 5,00,000 4,00,000 II. Add : Other income 10,000 20,000 III. Total Revenue (I + II) 5,10,000 4,20,000 IV. Less : Expenses Cost of material consumed 50,000 40,000 Depreciation & amortization expenses 20,000 20,000 V. Profit before tax (III - IV) 4,40,000 3,60,000

23. Sol… Common size statement of profit & loss for the year ended 31 st December 2013 & 2014 Particulars Note no. Absolute amounts ₹ Percentage of revenue from operation % 31-12-13 31-12-14 31-12-13 31-12-14 I. Revenue from operation 4,00,000 5,00,000 100% 100% II. Add : Other income 20,000 10,000 5% 2% III. Total Revenue (I + II) 4,20,000 5,10,000 105% 102% IV. Less : Expenses Cost of material consumed 40,000 50,000 10% 10% Depreciation & amortization expenses 20,000 20,000 5% 4% V. Profit before tax (III - IV) 3,60,000 4,40,000 90% 88%

24. Exercise (Do It Yourself ) 1.Prepare common size statement of profit & loss, from the following information: Particulars 31-3-15 ₹ 31-3-16 ₹ I. Revenue from operation 10,00,000 12,00,000 II. Add : Other income 3,00,000 5,00,000 III. Total Revenue (I + II) 13,00,000 17,00,000 IV. Less : Expenses Cost of material consumed 5,00,000 6,00,000 Depreciation & amortization expenses 10,000 20,000 finance cost 5,000 5,000 V. Profit before tax (III - IV) 7,85,000 10,75,000 VI. Tax (50 %) 3,92,500 5,37,500 VII. Profit after tax (V - VI) 3,92,500 5,37,500

25. Thank you

26. Presented by : Yamini Kahaliya BBA (honors’)