Question

Prepare a Comparative & Common Size Statement of Profit & Loss from the following information:

Particulars		2023 (₹)	2022 (₹)
Revenue from Operations		30,00,000	20,00,000
Cost of Materials Consumed		70% of Revenue from Operations	60% of Revenue from Operations
Other Expenses		20% of Cost of Materials Consumed	25% of Cost of Materials Consumed
Income Tax		40% of Net Profit before Tax	40% of Net Profit before Tax

Answer 1

Working Note 1: Statement of Profit & Loss (2023)

Particulars	Working	Amount (₹)
Revenue from Operations	Given	30,00,000
Less: Cost of Materials Consumed	70% of 30,00,000	21,00,000
Less: Other Expenses	20% of Cost of Materials = 20% of 21,00,000	4,20,000
Profit before Tax (PBT)	30,00,000 − 21,00,000 − 4,20,000	4,80,000
Less: Income Tax	40% of 4,80,000	1,92,000
Net Profit after Tax	4,80,000 − 1,92,000	2,88,000

Working Note 2: Statement of Profit & Loss (2022)

Particulars	Working	Amount (₹)
Revenue from Operations	Given	20,00,000
Less: Cost of Materials Consumed	60% of 30,00,000	12,00,000
Less: Other Expenses	25% of Cost of Materials = 25% of 12,00,000	3,00,000
Profit before Tax (PBT)	20,00,000 − 12,00,000 − 3,00,000	5,00,000
Less: Income Tax	40% of 5,00,000	2,00,000
Net Profit after Tax	5,00,000 − 2,00,000	3,00,000

 

Comparative Statement of Profit & Loss
Particulars	2023 (₹)	2022 (₹)	Absolute Change (₹)	Percentage Change (%)
Revenue from Operations	30,00,000	20,00,000	10,00,000	50.00
Cost of Materials Consumed	21,00,000	12,00,000	9,00,000	75.00
Other Expenses	4,20,000	3,00,000	1,20,000	40.00
Total Expenses (before tax)	25,20,000	15,00,000	10,20,000	68.00
Profit before Tax (PBT)	4,80,000	5,00,000	20,000	(4.00)
Income Tax	1,92,000	2,00,000	8,000	4.00
Profit after Tax (PAT)	2,88,000	3,00,000	12,000	(4.00)

Working Notes for Comparative Statement of Profit & Loss:

1. Absolute Change:
   Absolute Change = Current Year − Previous Year
   Revenue: 30,00,000, 20,00,000
   Absolute Change = 30,00,000 − 20,00,000
   ∴ Absolute Change = 10,00,000
2. Percentage Change:
   `"Percentage Change"=("Absolute Change"/"Previous Year")xx100`
   Cost of Materials: 9,00,000, 12,00,000
   `"Percentage Change"=(9,00,000)/(12,00,000)xx100`
   ∴ Percentage Change = 75.00%

Common-Size Statement of Profit & Loss
Particulars	2023 (%)	2022 (%)
Revenue from Operations	100.0	100.0
Cost of Materials Consumed	70.0	60.0
Other Expenses	14.0	15.0
Total Expenses (before tax)	84.0	75.0
Profit before Tax (PBT)	16.0	25.0
Income Tax	6.4	15.0
Profit after Tax (PAT)	9.6	10.0

Working Notes for Common-Size Statement of Profit & Loss:

`"Common-Size Percentage of an Item"="Value of the Item in a Particular Year"/"Revenue from Operations of the Same Year"xx100`

1. For 2023 (Revenue = ₹30,00,000)
   Other Expenses: 4,20,000,
   Common-Size (%) = `(4,20,000)/(30,00,000)xx100`
   ∴ Common-Size (%) = 14.0%
2. For 2022 (Revenue = ₹20,00,000)
   Other Expenses: 3,00,000,
   Common-Size (%) = `(3,00,000)/(20,00,000)xx100`
   ∴ Common-Size (%) = 15.0%