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  • In the Comparative Statements, figures for two or more years are placed side by side to facilitate comparison. This shows financial amounts in different columns on a single statement and facilitates comparison of a company’s financial position & performance across time. This is also known as ‘Horizontal Analysis’.
  • Comparative Balance Sheet is used for comparing assets, liabilities and capital and it shows increase and decrease in assets, liabilities and capital in absolute and percentage forms.
  • Comparative Profit & loss is used to show company's income and expenses over a given period. It shows changes in figures of statement of Profit & Loss both in absolute terms and in percentages.
  • Here operating expenses are expenses related to the main revenue generating activities of the enterprise, operating revenue or revenue from operations non-operating incomes are the incomes which are not generated from the principal revenue producing activities and non-operating expenses are expenses and losses which are not related to operating activities.
  • Common Size Statement uses percentages to express relationship of individual components to a total within a single period. It is also known as ‘Vertical Analysis’.
  • It compares each item in a financial statement to a base number set to 100%. In Common Size Statement of Profit & Lossthe revenue from operations figure is assumed to be 100 and other figures of cost or expenses are expressed as a percentage of revenue from operations.
  • In Common Size Balance Sheet, total assets/liabilities are taken as 100 and all individual items of assets/liabilities are expressed as a percentage of total.
  • Trend Analysis is one of the most useful forms of horizontal analysis in making comparative study of the financial statements for a number of years,but if same accounting policies are not followed consistently the trends become incomparable and misleading and it ignores price level changes.

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