comparative balance sheet is helpful in analysing and evaluating the financial position of the firm over a period of years. The comparative balance sheet analyse is the study of the trend of the same items, group of items, and computed items in two or more balance sheet of the same business enterprise on different dates.
The changes in periodic balance sheet items reflect the conduct of a business. The changes can be observed by comparison of the balance sheet at the beginning and at the end of the period and these changes can help in forming an opinion about the progress of an enterprise
COMMON SIZE BALANCE SHEET:
Financial statements when read in absolute figure are not easily understandable. They are even miss leading. Each items of asset is converted in to percentage to total asset and each item of capital and liabilities is expressed to total liability and capital fund. Thus the whole balance sheet is converted in to percentage form i.e., every individual item stated as a percentage of total 100.such converted balance sheet is known as common size balance sheet. The percentage so calculated can be easily compared with the corresponding percentages in some other period.
The ‘trend’ signifies a tendency and as such the review and appraisal of tendency in accounting variables are nothing but the trend analysis. Trend analysis is carried out by calculating trend ratio. Trend analysis is significant for forecasting and budgeting. Trend analysis discloses the change in financial and the operating data between specific periods.