BF 305 FINANCIAL STATEMENT

ANALYSIS
•CHAPTER 8

•Prof. Dr. Yüksel Akay ÜNVAN

 Comparative financial statements are the
comparison of the financial statements of the
business with the previous year's financial
Comparative statements.
Financial
Statements It enables identification of weak points and
(Karşılaştırm applying corrective measures.

alı Mali
Comparative statements are financial statements
Tablolar) that cover a different time frame, but comparative
statements are formatted in a manner that makes
comparing line items from one period to those of a
different period an easy process.
Comparative Financial Statements

The comparative statement

lines up a section of the Changes that have occurred
income statement and individuals categories from
balance sheet with its year to year and over the
corresponding section from years are easily noted.
a previous period.
Comparative Financial Statements

• Comparative analysis presents the same information for two or more different dates or
periods, so that like items may be compared.
• Ratio analysis provides only a single snapshot, for one given point or period in time.
• In a comparative analysis, an investment analyst can concentrate on a given item and
determine whether it appears to be growing or diminishing year by year and the
proportion of such change to related items.
• Generally, companies present comparative financial statements.
• They typically include two years of balance sheet information and three years of income
statement information.
 Comparative financial statements contain the
changes (increase or decrease) in the financial
statements of two or more periods.

Comparative The changes are shown in absolute figures and

percentages.

Financial
Statements This comparison can be made only if the same
accounting procedures are followed.

If the procedures are different it should be

taken into account by the analyst while making
the analysis.
Comparative Financial Statements

By preparing the comparative statements, we are analyzing:

The changes in the performance of two or more periods of a firm.

Two or more firms.

• There are two financial statements including balance sheet and income
statement are prepared in comparative form for analysis purposes.
The Comparative Balance Sheet

The comparative balance sheet

The changes can be observed
analysis is the study of the
by comparison of the balance
trend of the same items, group
sheet at the beginning and at
of items and the same items,
the end of a period and these
group of items and computed
changes can help in forming and
items in two or more computed
these changes can help in
items in two or more balance
forming an opinion about the
sheets of the same business
progress of an enterprise.
enterprise on different dates.
The Comparative Balance Sheet

The comparative balance sheet shows the different assets and liabilities of the firm on
different dates to make comparison of balances from one date to another.

The comparative balance sheet has two columns for the data of original balance sheets.

A third column is used to show change (increase/decrease) in figures.

The fourth column may be added for giving percentages of increase or decrease.
The Comparative Balance Sheet (Karşılaştırmalı
Bilanço)
• Comparative analysis for percentage change calculated as follows:

Comparative analysis for percentage change= Current Year Amount-Base Year Amount (Mevcut Yıl Tutarı-Baz Yıl Tutarı)
(Yüzdesel Değişim) Base Year Amount (Baz Yıl Tutarı)
The Comparative Balance Sheet
• Example 1:The following is the balance sheets of ABC Company for the year 2021.
ASSETS (Varlıklar) 2021 2020

Current Assets (Dönen Varlıklar) 1.020.000 945.000

Non-current Assets (Duran Varlıklar) 815.000 650.000

Total Assets (Toplam Varlıklar) 1.835.000 1.595.000

LIABILITIES (Yükümlülükler-Yabancı Kaynaklar)

Current Liabilities (Kısa Vadeli Yükümlülükler) 344.500 303.000

Non-current Liabilities (Uzun Vadeli Yükümlülükler) 487.500 497.000

Total Liabilities (Toplam Yükümlülükler) 832.000 800.000

SHAREHOLDERS EQUITY (Özkaynaklar)

Common Stock (Sermaye) 275.400 270.000

Retained Earnings (Dağıtılmamış Kârlar) 727.600 525.000

Total Shareholders Equity (Toplam Özkaynaklar) 1.003.000 795.00
Total Liabilities and Shareholders Equity (Toplam Yükümlülük ve Özkaynaklar) 1.835.000 1.595.000
The Comparative Balance Sheet
• Required for Example 1:Prepare the comparative analysis of balance sheets for
ABC Company.
• Solution of Example 1:

Comparative analysis for percentage change= Current Year Amount-Base Year Amount (Mevcut Yıl Tutarı-Baz Yıl Tutarı)
(Yüzdesel Değişim) Base Year Amount (Baz Yıl Tutarı)
• For Current Asset (Dönen Varlıklar için) =1.020.000-945.000 = 75.000 = 7,9 %
945.000 945.000
• For Non-Current Asset (Duran Varlıklar için) = 815.000-650.000 = 165.000 = 25,4 %
650.000 650.000
• For Total Assets (Toplam Varlıklar için) = 1.835.000-1.595.000 = 240.000 = 15 %
1.595.000 1.595.000
The Comparative Balance Sheet
• Solution of Example 1:
• Comparative analysis for percentage change= Current Year Amount-Base Year Amount
Base Year Amount
• For Current Liabilities (Kısa Vadeli Yükümlülükler için) = 344.500-303.000 = 41.500 = 13,70%
303.000 303.000

• For Non-Current Liabilities (Uzun Vadeli Yükümlülükler için) = 487.500-497.000 = (9.500) = (1,90)%
497.000 497.000

• For Total Liabilities (Toplam Yükümlülükler için) = 832.000-800.000 = 32.000 = 4%

800.000 800.000

• For Total Shareholders Equity (Toplam Özkaynaklar için) = 1.003.000-795.000 = 208.000= 26,20%
795.000 795.000
The Comparative Balance Sheet
• Solution of Example 1:
ASSETS (Varlıklar) 2021 2020 Amount (Tutar) Percent (Yüzde)
Current Assets (Dönen Varlıklar) 1.020.000 945.000 75.000 7,9%
Non-current Assets (Duran Varlıklar) 815.000 650.000 165.000 25,4%
Total Assets (Toplam Varlıklar) 1.835.000 1.595.000 240.000 15%
LIABILITIES (Yükümlülükler-Yabancı Kaynaklar)

Current Liabilities (Kısa Vadeli Yükümlülükler) 344.500 303.000 41.500 13,70%

Non-current Liabilities (Uzun Vadeli Yükümlülükler) 487.500 497.000 (9.500) (1,90)%
Total Liabilities (Toplam Yükümlülükler) 832.000 800.000 32.000 4%
SHAREHOLDERS EQUITY (Özkaynaklar)
Common Stock (Sermaye) 275.400 270.000 5.400 2%
Retained Earnings (Dağıtılmamış Kârlar) 727.600 525.000 202.600 38,60%
Total Shareholders Equity (Toplam Özkaynaklar) 1.003.000 795.00 208.000 26,20%
Total Liabilities and Shareholders Equity (Toplam Yükümlülük ve 1.835.000 1.595.000 240.000 15%
Özkaynaklar)
The Comparative Balance Sheet
• Example 2:The following is the comparative schedule of current assets for ABC
Company.
ASSETS (VARLIKLAR) 2020 2019
CURRENT ASSETS (Dönen Varlıklar)
Cash (Kasa) 90.500 64.700
Marketable Securities (Menkul Kıymetler) 75.000 60.000
Accounts Receivable (Alacak Hesapları) 115.000 120.000
Inventory (Stoklar) 264.000 283.000
Prepaid Expenses (Önceden Ödenmiş Giderler) 5.500 5.300
TOTAL CURRENT ASSETS (Toplam Dönen Varlıklar) 550.000 533.000

• Required: Prepare the comparative analysis of current assets for ABC Company.
The Comparative Balance Sheet
• Solution of Example 2:

• Comparative analysis for percentage change= Current Year Amount-Base Year Amount
Base Year Amount

• For Cash (Kasa Hesabı için) = 90.500-64.700= 25.800 = 39,9 %

64.700 64.700

• For Marketable Securities (Menkul Kıymetler için) = 75.000-60.000 = 15.000 = 25%

60.000 60.000

• For Accounts Receivable (Alacak Hesapları için) = 115.000-120.000 = (5.000) = (4,2)%

120.000 120.000
The Comparative Balance Sheet
• Solution of Example 2:

• For Inventory (Stoklar için) = 264.000-283.000= (19.000) = (6,7) %

283.000 283.000

• For Prepaid Expenses (Önceden Ödenmiş Giderler için)= 5.500-5.300 = 200 = 3,80%
5.300 5.300

• For Total Current Assets(Toplam Dönen Varlıklar için) = 550.000-533.000 = 17.000= 3,2%
533.000 533.000
The Comparative Balance Sheet
• Solution of Example 2:.

ASSETS (VARLIKLAR) 2020 2019 Increase/Decrease

(Artış/Azalış)
CURRENT ASSETS (Dönen Varlıklar) Amount (Tutar) Percentage(%)
(Yüzde)
Cash (Kasa) 90.500 64.700 25.800 39,9

Marketable Securities (Menkul Kıymetler) 75.000 60.000 15.000 25

Accounts Receivable (Alacak Hesapları) 115.000 120.000 (5.000) (4,2)

Inventory (Stoklar) 264.000 283.000 (19.000) (6,7)

Prepaid Expenses (Önceden Ödenmiş 5.500 5.300 200 3,8

Giderler)
TOTAL CURRENT ASSETS (Toplam Dönen 550.000 533.000 17.000 3,2
Varlıklar)
The Comparative Income Statement
(Karşılaştırmalı Gelir Tablosu)

• This statement shows the working result of the enterprise for a

given period of time and serves the purpose of comparison.
• It gives an idea of the progress of a business over a period of
time.
• The working results of two or more firms or two or more periods
of the same firm can be expressed in money percentages.
 Steps involved in the interpretation of Income Statements:
• The increase or decrease in sales should be compared with
the increase or decrease in cost of goods sold.
• The second step is the study of operating profit. For
calculating operating profit, operating expenses such as
The office and administrative expenses, selling and distribution
expenses etc. should be deducted from Gross Profit.
Comparative • Anin sales
increase in operating profit will result from an increase
position and control of operating expenses. At the
Income same time a decrease in profit may be due to an increase
in operating expenses or a decrease in sales.

Statement • The increase or decrease in profit will give an idea about

the overall profitability of the concern.
• An opinion should be formed about profitability of the
concern and it should be given at the end. It should be
mentioned whether the overall profitability is good or not.
The Comparative Income Statement
The comparative income statement gives an idea of the progress of a business over a period of time.

The changes in money value and percentage can be determined to analyse the profitability of the business.

Like comparative balance sheet, income statement also has four columns.

The first two columns are shown figures of various items for two years.

Third and fourth columns are used to show increase or decrease in figures in absolute amount and percentages
respectively.
The Comparative
Income Statement
The analysis and interpretation of income
statement will involve the following:
• The increase or decrease in sales should be
compared with the increase or decrease in
cost of goods sold.
• To study the operating profits.
• The increase or decrease in net profit is
calculated that will give an idea about the
overall profitability of the concern.
The Comparative Income Statement
Example 3: The following is the income statement of Whiteday Corporation for the
year 2021
2020 2021
Net Sales (Net Satışlar) 1.200.000 2.100.000
Cost of Goods Sold (Satışların Maliyeti) 800.000 1.500.000
Gross Profit (Brüt Kâr) 400.000 600.000
Operating Expenses (Faaliyet Giderleri)
Advertising Expenses (Reklam Giderleri) 200.000 400.000
Operating Income ( Faaliyet Kârı) 200.000 200.000
Interest Expenses (Faiz Giderleri) 50.000 30.000
Earning Before Tax (Vergi Öncesi Kârı) 150.000 170.000
Income Tax (Gelir Vergisi) 30.000 34.000
Net Income (Net Kâr) 120.000 136.000

Required: Prepare the comparative analysis of income statement of Whiteday

The Comparative Income Statement
Solution of Example 3:

• Comparative analysis for percentage change= Current Year Amount-Base Year Amount
Base Year Amount
• For Net Sales (Net Satışlar için) = 2.100.000-1.200.000= 900.000= 75 %
1.200.000 1.200.000
• For Cost of Goods Sold (Satışların Maliyeti için)= 1.500.000-800.000 = 700.000= 87,5%
800.000 800.000
• For Gross Profit (Brüt Kâr için) = 600.000-400.000 = 200.000= 50%
400.000 400.000
• For Net Income (Net Kâr için) = 136.000-120.000 = 16.000= 13,33%
120.000 120.000
The Comparative Income Statement
Solution of Example 3:
2020 2021 Increase/Decrease Percentage
Net Sales (Net Satışlar) 1.200.000 2.100.000 900.000 75
Cost of Goods Sold (Satışların Maliyeti) 800.000 1.500.000 700.000 87,50
Gross Profit (Brüt Kâr) 400.000 600.000 200.000 50
Operating Expenses (Faaliyet Giderleri)
Advertising Expenses (Reklam Giderleri) 200.000 400.000 200.000 100
Operating Income ( Faaliyet Kârı) 200.000 200.000 - -
Interest Expenses (Faiz Giderleri) 50.000 30.000 (20.000) (40)
Earning Before Tax (Vergi Öncesi Kârı) 150.000 170.000 20.000 13,33
Income Tax (Gelir Vergisi) 30.000 34.000 4.000 13,33
Net Income (Net Kâr) 120.000 136.000 16.000 13,33
The Comparative Income Statement
Example 4: The following is the comparative retained earnings statement
for Whiteday Corporation.
2021 2020

Retained Earnings (Dağıtılmamış Kârlar) (January 1) 137.500 100.000

Net income for the year (Net Dönem Kârı) 91.000 76.500

Total (Toplam) 228.500 176.500

Dividends (Temettüler) 49.000 39.000

On preferred stock (İmtiyazlı hisse senedi) 9.000 9.000

On common stock (Adi hisse senedi) 40.000 30.000

Retained Earnings, December 31 (Dağıtılmamış Kârlar) 179.500 137.500

Required: Prepare the comparative analysis of retained earnings

statements for Whiteday Corporation.
The Comparative Income Statement
Solution of Example 4:
2021 2020 Increase/Decrease Percentage

Retained Earnings (Dağıtılmamış Kârlar) (January 1) 137.500 100.000 37.500 37,50

Net income for the year (Net Dönem Kârı) 91.000 76.500 14.500 19

Total (Toplam) 228.500 176.500 52.000 29,50

Dividends (Temettüler) 49.000 39.000 10.000 25,60

On preferred stock (İmtiyazlı hisse senedi) 9.000 9.000 - -

On common stock (Adi hisse senedi) 40.000 30.000 10.000 33,30

Retained Earnings, December 31 (Dağıtılmamış 179.500 137.500 42.000 30,50

Kârlar)