Difference between Comparative and Common Size Statement (2024)

Posted byBy Sarbjit Singh6 Min Read March 5, 2023

Difference between Comparative and Common Size Statement-min

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What is the Comparative Statement:

The comparative statements are that statement which shows the comparison between the component of the financial statement of the business for the period of more the two years. The components of the two or more years are shown side by side on the same page and then calculate the change from the base year of all the elements. It is the tools for the analysis of the financial statements of the business.

Comparative Statements – Balance Sheet & Profit and Loss

What is the Common Size Statement

The Common-Size statement is that statement that shows the percentage to a common base of all accounts of the financial statement of the business for the period of more than two years. The components of the two or more years are shown side by side in vertical order on the same page and then calculate the percentage on the common base of net sales of both years of all the elements. It is the tools for the analysis of the financial statements of the business.

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Common-Size Statements – Balance Sheet

Chart of Difference between Comparative and Common Size Statement: –

Basis of Difference	Comparative	Common Size
Meaning	The comparative statements are that statement which shows the comparison between the component of the financial statement of the business for the period of more the two years	The Common-Size statement is that statement which shows the percentage to a common base of all accounts of the financial statement of the business for the period of more than two years.
Base of Comparison	In this, the value of the basis year compared with the value of the current year.	In this, the value of the current year compared with the current year.
Number of Years required	Minimum Financial Statements of two years are required.	The financial Statement of One year is required.
Results expressed in	The results are expressed in the pictorial as well as percentage form.	The results are expressed in the percentage form.
Type of Comparision included	It included both types of Intra and inter-firm comparison.	It included only inter-firm comparison.
Helps in	It helps in the decision making for the management for future planning.	It helps the stakeholder in the decision of the investment.
Useful in	It is useful to compare the current year results with the prevision year.	It is useful to compare the current year results with its competitors’ results.

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Difference between Comparative and Common Size Statement (2)

Difference between Comparative and Common Size Statement (3)

Conclusion:

Thus, both terms have the only main difference in the basis of the calculation. In the comparative statement, the base year values are compared with the current year and in the common size statement, the value of the current year compared by calculating the share of the percentage of the particular item out of the total of the balance sheet or net sale if comparing profit and loss account.

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