Page 177 - DMGT202_COST_AND_MANAGEMENT_ACCOUNTING

Cost and Management Accounting

Notes *N.C = No change in the position during the two years
Particulars 2004 (`) 2005 (`) Absolute % Increase % Decrease
Change (`)
Fixed Assets 60,00,000 72,00,000 12,00,000 20 -
Investments 10,00,000 10,00,000 N.C - -
Current assets 30,00,000 21,00,000 (9,00,000) 30
Total Assets 1,00,00,000 1,03,00,000 3,00,000 3 -
Equity share capital 50,00,000 50,00,000 N.C - -
Reserves and surpluses 10,00,000 12,00,000 2,00,000 20 -
Long-term loans 30,00,000 30,00,000 N.C - -
Current liabilities 10,00,000 11,00,000 1,00,000 10 -
Total Liabilities 1,00,00,000 1,03,00,000 3,00,000 3 -
From the above table, the following are basic inferences:

1. The fixed assets volume got increased 20% from the year 2004 to 2005, amounted
` 12,00,000.
2. ` 9,00,000 worth of current assets decrease from the year 2004 to 2005 recorded 30%.
3. The total volume of assets recorded 3% increase from the year 2004 to 2005.

4. It obviously understood that 20% increase taken place on the reserves and surpluses.
5. It clearly evidenced that the current liabilities of the firm increased 10% from the year 2004

to 2005.
6. The firm has not recorded any changes in the investments, equity share capital and

long-term loans.
10.3.2 Comparative (Income) Financial Statement Analysis

This analysis is being carried out in between the income statements of the various accounting

durations of the firm, with other firms in the industry and with the industrial average.
This will facilitate the firm to know about the stature of itself regarding the fi nancial performance.

It facilitates to understand about the changes pertaining to various financial data which closely

relevantly connected with the fi nancial performance:
1. Change in the gross sales
2. Change in the net sales

3. Change in gross profit and net profi t
4. Change in operating profi t
5. Change in operating expenses
6. Change in the volume of non-operating income
7. Change in the non operating expenses.
The ultimate purpose of the comparative (income) financial statement analysis is as follows:

1. To study the income earning and expenditure spending pattern of the firm for two or more
years.
2. To identify the changing pattern of the income and expenditure of the fi rms.

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