Question

Prepare a common size statement of profit & loss of X Ltd. from the following information:

Particulars	Note No.	31.3.2023 (₹)	31.3.2022 (₹)
Revenue from Operations		18,00,000	15,00,000
Cost of Materials Consumed		7,20,000	7,50,000
Employee Benefit Expenses (% of Cost of Materials Consumed)		50%	60%
Other Expenses (% of Employee Benefit Exp.)		25%	20%

Answer 1

Common Size Statement of Profit & Loss of X Ltd. for the years ended 31st March, 2023 and 2022
Particulars	Note No.	Absolute Amounts		Percentage of Revenue from Operations
		31.3.2023 (₹)	31.3.2022 (₹)	31.3.2023 (%)	31.3.2022 (%)
I. Revenue from Operations		18,00,000	15,00,000	100.00	100.00
II. Less: Expenses:
Cost of Materials Consumed		7,20,000	7,50,000	40.00	50.00
Employee Benefit Expenses		3,60,000	4,50,000	20.00	30.00
Other Expenses		90,000	90,000	5.00	6.00
Total Expenses		11,70,000	12,90,000	65.00	86.00
III. Profit Before Tax (I − II)		6,30,000	2,10,000	35.00	14.00

Working Note:

1. Employee Benefit Expenses:

For year 31-03-2023:

Employee Benefit Expenses = 50% of ₹ 7,20,000

= ₹ 7,20,000 × 0.5 = ₹ 3,60,000

For year 31-03-2022:

Employee Benefit Expenses = 60% of ₹ 7,50,000

= ₹ 7,50,000 × 0.6 = ₹ 4,50,000

2. Calculate Other Expenses:

For year 31-03-2023:

Other Expenses = 25% of ₹ 3,60,000

= ₹ 3,60,000 × 0.25 = ₹ 90,000

For year 31-03-2022:

Other Expenses = 20% of ₹ 4,50,000

= ₹ 4,50,000 × 0.20 = ₹ 90,000

3. Prepare Total Expenses:

For year 31-03-2023:

Total Expenses = Cost of Materials + Employee Benefit Expenses + Other Expenses

= ₹ 7,20,000 + ₹ 3,60,000 + ₹ 90,000

= ₹ 11,70,000

For year 31-03-2022:

Total Expenses = ₹ 7,50,000 + ₹ 4,50,000 + ₹ 90,000

= ₹ 12,90,000

4. Calculate Profit Before Tax:

For year 31-03-2023:

Profit Before Tax = Revenue from Operations − Total Expenses

= ₹ 18,00,000 − ₹ 11,70,000

= ₹ 6,30,000

For year 31-03-2022:

Profit Before Tax = ₹ 15,00,000 − ₹ 12,90,000

= ₹ 2,10,000