AccountsISC Class 12 · Financial Statement Analysis

Comparative Statements: Balance Sheet and Statement of Profit and Loss, ISC Class 12 Accounts

Updated 17 October 2026 · Draft, not yet fact-checked

A comparative statement places the figures of two or more years (intra-firm) or of two firms (inter-firm) side by side and shows the absolute change and the percentage change for each item. Percentage change = (absolute change ÷ base figure) × 100, where the earlier year or the first firm is the base. It helps managers spot which items are growing faster than others.

Fill Year 1 and Year 2, subtract for the change, then divide that change by the base year and multiply by 100 for the percentage.

Illustration drawn for QuestionBuddy.

Understand Comparative Statements and the Statement of Profit and Loss Format

Purpose. Financial statements of one year say little by themselves. Comparative statements are tools of financial statement analysis that set figures side by side so that increases and decreases become visible. The ISC syllabus asks for the meaning, significance and limitations of comparative statements, and for preparing a Comparative Balance Sheet and a Comparative Statement of Profit and Loss, intra-firm and inter-firm, showing absolute change and percentage change. These are prepared from the Balance Sheets and Statements of Profit and Loss without notes to accounts.

Intra-firm and inter-firm. *Intra-firm* comparison compares the same firm across years, with the earlier year as the base. *Inter-firm* comparison compares two firms for the same year, with one firm chosen as the base.

Format of the Statement of Profit and Loss (Schedule III Part II). The syllabus asks you to study its extent and format, which runs in this order:

I. Revenue from operations
II. Other Income
III. Total Revenue (I + II)
IV. Expenses: cost of materials consumed; purchases of stock-in-trade; changes in inventories of finished goods, work-in-progress and stock-in-trade; employee benefits expense; finance costs; depreciation and amortisation expense; other expenses; total expenses
V. Profit before tax (III − IV)
VI. Less: Tax
VII. Profit after tax (V − VI)

Columns. Particulars | Year 1 | Year 2 | Absolute change (Year 2 − Year 1) | Percentage change.

Percentage change = Absolute change ÷ Base year figure × 100. A fall gives a negative change (shown in brackets). If the base figure is zero the percentage cannot be calculated, so it is left blank or marked as not defined.

Totals are changed separately. Compute the change of each total from its own two figures. Do not add up the percentages of the items.

Significance. Trends become visible; the weak items (for example, expenses rising faster than revenue) are located; management can set targets; investors and lenders see progress; an inter-firm comparison shows how a firm stands against a rival.

Limitations. (i) Figures are historical. (ii) Accounting policies must be the same in both years or firms, otherwise the comparison misleads. (iii) Changes in the price level are ignored. (iv) Non-financial matters such as management quality are not shown. (v) Percentage changes on a small base look larger than they are. (vi) Only two (or a few) points are compared, which can hide a trend.

Comparative Statements and the Statement of Profit and Loss Format: key facts

Absolute change: Current year figure | less Base year figure; Negative for a decrease.
Percentage change: Absolute change
divided by Base year figure
multiplied by 100; Blank if the base figure is zero.
Total Revenue: Revenue from operations | add Other Income; Statement of Profit and Loss, item III.
Profit before tax: Total Revenue | less Total Expenses; Item V.
Profit after tax: Profit before tax | less Tax; Item VII.

How to answer Comparative Statements and the Statement of Profit and Loss Format questions

Comparative statements are quick marks if the layout is exact and each total is computed from its own columns.

1Draw the five columns: Particulars, two years, Absolute change, Percentage change.
2List items in the Schedule III order, with sub-totals as separate lines.
3Compute each absolute change as later minus earlier.
4Divide by the earlier figure and multiply by 100 for each line, including totals.
5Check that Total Assets equals Total Equity and Liabilities in both years.

Comparative Statements and the Statement of Profit and Loss Format in real life

The idea, met in an everyday situation. Answer the question in your own words, then compare with the model answer. The one-line hook is what to remember.

Growth in sales versus growth in profit

Suppose a juice company's revenue rose from ₹4,00,000 to ₹5,00,000 in a year, while its profit after tax rose from ₹40,000 to ₹45,000.

Compare the percentage changes and say what the manager should look at.

Try it first, then show the solutionSolution

Revenue change = 1,00,000 ÷ 4,00,000 × 100 = 25%.
Profit change = 5,000 ÷ 40,000 × 100 = 12.5%.
Profit grew at half the speed of revenue.

Answer: Revenue +25%, profit +12.5%; costs are rising faster than sales and should be examined.

Memory hook: Compare the speeds, not just the sizes.

Tricks to remember Comparative Statements and the Statement of Profit and Loss Format

Short memory aids. Say each one aloud once, then use it on a question the same day.

Later minus earlier
Change is always the later year minus the earlier year; percentage is on the earlier year.
Use it when: Every comparative statement.
Five columns
Particulars, Year 1, Year 2, ₹ change, % change.
Use it when: Layout.
Totals stand alone
Compute each total's percentage from its own figures.
Use it when: Avoiding addition of percentages.

Comparative Statements and the Statement of Profit and Loss Format: solved examples

Ordered from board level to HOTS. Try each one before you open the solution.

Example 1: Percentage change in revenue · 1 mark · MCQBoard level

Revenue from operations of a company was ₹6,00,000 in 2024-25 and ₹7,50,000 in 2025-26. The percentage change is:
(a) 20%
(b) 25%
(c) 80%
(d) 12.5%

Try it first, then show the solutionSolution

Absolute change = 7,50,000 − 6,00,000 = ₹1,50,000.
Percentage = 1,50,000 ÷ 6,00,000 × 100 = 25%, on the base year.

Answer: (b) 25%

Example 2: Limitations of comparative statements · 3 marks · Short answerBoard level

State any three limitations of comparative statements. (3 marks)

Try it first, then show the solutionSolution

They use historical figures, so they show what happened, not what will happen.
They are misleading if the two periods or firms follow different accounting policies.
They ignore price-level changes and non-financial factors.

Answer: Historical figures; dependence on uniform accounting policies; no allowance for price-level changes or non-financial factors.

Example 3: Comparative Statement of Profit and Loss · 6 marks · Long answerHarder board level

The figures below are taken from the books of Aster Ltd. Present them in comparative form with absolute and percentage change, ending at profit after tax. Revenue from operations ₹8,00,000 and ₹10,00,000; Other income ₹40,000 and ₹60,000; Cost of materials consumed ₹3,60,000 and ₹4,40,000; Employee benefits expense ₹1,20,000 and ₹1,50,000; Finance costs ₹20,000 each year; Depreciation ₹40,000 and ₹50,000; Other expenses ₹80,000 and ₹1,00,000. Tax rate 30%. (6 marks)

Try it first, then show the solutionSolution

Total Revenue: 8,40,000 and 10,60,000. Total Expenses: 6,20,000 and 7,60,000.
Profit before tax: 2,20,000 and 3,00,000. Tax at 30%: 66,000 and 90,000.
Profit after tax: 1,54,000 and 2,10,000.
Percentage changes use the 2024-25 figures: revenue 25%, total expenses 22.58%, profit after tax 36.36%.

Answer:

Particulars	2024-25 (₹)	2025-26 (₹)	Absolute change (₹)	Percentage change
I. Revenue from operations	8,00,000	10,00,000	2,00,000	25.00%
II. Other Income	40,000	60,000	20,000	50.00%
III. Total Revenue (I + II)	8,40,000	10,60,000	2,20,000	26.19%
IV. Expenses
Cost of materials consumed	3,60,000	4,40,000	80,000	22.22%
Employee benefits expense	1,20,000	1,50,000	30,000	25.00%
Finance costs	20,000	20,000	0	0.00%
Depreciation and amortisation expense	40,000	50,000	10,000	25.00%
Other expenses	80,000	1,00,000	20,000	25.00%
Total Expenses	6,20,000	7,60,000	1,40,000	22.58%
V. Profit before tax (III − IV)	2,20,000	3,00,000	80,000	36.36%
VI. Tax at 30%	66,000	90,000	24,000	36.36%
VII. Profit after tax (V − VI)	1,54,000	2,10,000	56,000	36.36%

Example 4: Comparative Balance Sheet · 6 marks · Long answerHarder board level

Prepare a Comparative Balance Sheet of Birch Ltd. as at 31st March 2025 and 2026 from: Equity share capital ₹5,00,000 and ₹6,00,000; Reserves and surplus ₹1,50,000 and ₹2,10,000; Long-term borrowings ₹2,00,000 and ₹1,50,000; Trade payables ₹80,000 and ₹1,10,000; Short-term provisions ₹40,000 and ₹50,000; Property, plant and equipment ₹5,50,000 and ₹6,00,000; Non-current investments ₹1,00,000 each year; Inventories ₹1,40,000 and ₹1,90,000; Trade receivables ₹1,20,000 and ₹1,70,000; Cash and cash equivalents ₹60,000 each year. (6 marks)

Try it first, then show the solutionSolution

Totals: Equity and Liabilities ₹9,70,000 and ₹11,20,000; Assets ₹9,70,000 and ₹11,20,000, so the sides agree each year.
Absolute change is 2026 minus 2025 for each line; percentage is on the 2025 figure.
Long-term borrowings fall by ₹50,000 (a decrease of 25%).

Answer:

Particulars	31 March 2025 (₹)	31 March 2026 (₹)	Absolute change (₹)	Percentage change
Equity and Liabilities
Equity share capital	5,00,000	6,00,000	1,00,000	20.00%
Reserves and surplus	1,50,000	2,10,000	60,000	40.00%
Long-term borrowings	2,00,000	1,50,000	(50,000)	-25.00%
Trade payables	80,000	1,10,000	30,000	37.50%
Short-term provisions	40,000	50,000	10,000	25.00%
Total	9,70,000	11,20,000	1,50,000	15.46%
Assets
Property, plant and equipment	5,50,000	6,00,000	50,000	9.09%
Non-current investments	1,00,000	1,00,000	0	0.00%
Inventories	1,40,000	1,90,000	50,000	35.71%
Trade receivables	1,20,000	1,70,000	50,000	41.67%
Cash and cash equivalents	60,000	60,000	0	0.00%
Total	9,70,000	11,20,000	1,50,000	15.46%

Example 5: An inter-firm comparison · 3 marks · Short answerHOTS / competency

Revenue from operations of Firm X is ₹12,00,000 and of Firm Y ₹15,00,000. Profit after tax is ₹1,20,000 for X and ₹1,35,000 for Y. Taking X as the base, find the absolute and percentage difference in each figure, and say which firm looks more profitable after relating profit to revenue. (3 marks)

Try it first, then show the solutionSolution

Revenue: 15,00,000 − 12,00,000 = ₹3,00,000, which is 25% of X.
Profit after tax: 1,35,000 − 1,20,000 = ₹15,000, which is 12.5% of X.
Profit per rupee of revenue: X = 1,20,000 ÷ 12,00,000 = 10%; Y = 1,35,000 ÷ 15,00,000 = 9%.

Answer: Y has ₹3,00,000 (25%) more revenue and ₹15,000 (12.5%) more profit, but X earns 10% on revenue against 9% for Y, so X is more profitable relative to its size.

Where students lose marks in Comparative Statements and the Statement of Profit and Loss Format

The slips examiners see most often, and what to write instead.

Mistake: Taking the later year as the base
Dividing by the larger figure.
Wrong working
1,50,000 ÷ 7,50,000 × 100 = 20%
Right working
1,50,000 ÷ 6,00,000 × 100 = 25%
Do this: The base is the earlier year (or the first firm).
Usually costs: 1 mark per column.
Mistake: Adding up percentages for totals
Treating percentages like rupee figures.
Wrong working
Total change = 25% + 50% = 75%
Right working
Total Revenue change = 2,20,000 ÷ 8,40,000 × 100 = 26.19%
Do this: Compute each total from its own two year figures.
Usually costs: 1-2 marks.
Mistake: Writing a decrease as positive
Subtracting in the wrong order.
Wrong working
Long-term borrowings change = 50,000 (25%)
Right working
Change = (50,000), a decrease of 25%
Do this: Always later minus earlier; show a fall in brackets.
Usually costs: 1 mark.
Mistake: Mixing the Schedule III order
Putting finance costs after other expenses.
Wrong working
Expenses in a free order
Right working
Cost of materials, purchases, changes in inventories, employee benefits, finance costs, depreciation, other expenses
Do this: Follow the order in the syllabus format.
Usually costs: 1 mark.

Exam tips

Draw the five columns and ruled lines; examiners credit the layout.
Show one sample percentage calculation for a line or two.
Keep notes to accounts out: the syllabus says comparative statements are made without them.
Use "Increase" or "Decrease" comments only if the question asks for an interpretation.

Practice questions on Comparative Statements and the Statement of Profit and Loss Format

Write each answer on paper first. Open the hint only if you are stuck, and the answer only when you have finished.

Q1 · 1 mark · MCQBoard level
Revenue fell from ₹4,00,000 to ₹3,60,000. The percentage change is:
(a) +10%
(b) -10%
(c) -11.11%
(d) +11.11%
Hint
Divide by the earlier year.
Answer
(b) -10%
Q2 · 3 marks · Short answerBoard level
State two uses and two limitations of comparative statements. (3 marks)
Hint
Trends and weak areas versus historical figures.
Answer
Uses: they show trends over the years; they locate items that are growing faster or slower than others. Limitations: they depend on historical figures; they are misleading if accounting policies differ between the periods or firms.
Q3 · 3 marks · Short answerHarder board level
Trade payables of a company in 2024-25 were ₹2,40,000 and increased by 25% in 2025-26. Property, plant and equipment of ₹8,00,000 decreased by 12.5%. Find the 2025-26 figures and the absolute changes. (3 marks)
Hint
Use the base year as 100%.
Answer
Trade payables = 2,40,000 × 1.25 = ₹3,00,000 (change +60,000). PPE = 8,00,000 × 0.875 = ₹7,00,000 (change −1,00,000).
Q4 · 6 marks · Long answerHarder board level
Garnet Ltd. reports the following for two years (2024-25 first). Show the year-on-year movement of every line down to profit after tax, with a percentage for each. Revenue from operations ₹6,00,000 and ₹7,20,000; Other income ₹30,000 and ₹18,000; Cost of materials consumed ₹2,70,000 and ₹3,06,000; Employee benefits expense ₹90,000 and ₹99,000; Depreciation ₹30,000 and ₹36,000; Other expenses ₹60,000 and ₹72,000. Tax rate 40%. (6 marks)
Hint
Total Revenue first.
Answer
Total Revenue 6,30,000 and 7,38,000 (+1,08,000; 17.14%). Total Expenses 4,50,000 and 5,13,000 (+63,000; 14.00%). Profit before tax 1,80,000 and 2,25,000 (+45,000; 25.00%). Tax 72,000 and 90,000 (+18,000; 25.00%). Profit after tax 1,08,000 and 1,35,000 (+27,000; 25.00%). Other income changes by (12,000), a fall of 40.00%.
Q5 · 3 marks · Short answerHOTS / competency
In a year, Rhea Ltd.'s revenue rose by 50% from ₹10,00,000 to ₹15,00,000 and its profit after tax rose by 20% from ₹1,00,000 to ₹1,20,000. A director calls this "a good year since both have risen". Evaluate, with calculations. (3 marks)
Hint
Compare profit per rupee of revenue.
Answer
Profit margin fell from 1,00,000 ÷ 10,00,000 = 10% to 1,20,000 ÷ 15,00,000 = 8%. Revenue grew faster than profit, so costs grew faster than sales; the year is not clearly good.

Test your recall

Answer in your head or on paper first, then open the card. Pulling an answer out of memory makes it stick far better than re-reading.

1.Formula for percentage change?Show answer
Absolute change ÷ base year figure × 100.
2.Which year is the base in intra-firm comparison?Show answer
The earlier year.
3.Can percentage change be found when the base is zero?Show answer
No; leave it blank or mark not defined.
4.What is Total Revenue in the Statement of Profit and Loss?Show answer
Revenue from operations plus Other Income.
5.Are notes to accounts used in comparative statements?Show answer
No, the syllabus says they are made without them.

Comparative Statements and the Statement of Profit and Loss Format: frequently asked questions

What is the difference between intra-firm and inter-firm comparison?

Intra-firm compares one firm across years; inter-firm compares two firms in the same year.

Do I prepare common size statements here?

No. Common size statements are on the next topic page.

Which figures go in the Statement of Profit and Loss?

Revenue from operations, other income, the listed expenses, profit before tax, tax and profit after tax.

How many decimals should percentages have?

Two decimals is safe; state the rounding if the question does not.