TECHNIQUES OF

FINANCIAL
STATEMENT ANALYSIS
BY: GENESS A BASILISCO
 Techniques of FS Analysis
Comparative Statement
Analysis
- is an analysis of financial statement at different period of time
- the most commonly used technique
Classified into two major parts
1. Comparative Balance Sheet Analysis / Comparative Position Statement Analysis
2. Comparative Profit and Loss Account Analysis / Comparative Income Statement Analysis
 Techniques of FS Analysis
Comparative Statement
Analysis
Comparative Balance Sheet Analysis/Comparative Position Statement Comparative Profit & Loss Account Analysis/Comparative Income
Analysis Statement Analysis

• Concentrates only the balance sheet/financial • helps to understand the operational

position of the concern at different period of performance/results of the business concern
time in a given period

• Helps understand how the assets, liabilities &

capital are placed during a period
 Techniques of FS Analysis
Comparative Statement Analysis
Comparative Balance Sheet Analysis / Comparative Position Statement Analysis

Increased/ Increased/
Particulars 2020 2021 Decreased
(amount)
Decreased
(percentage) Steps to prepare a comparative
ASSETS analysis:
Current Assets
Cash and Cash Equivalents 502,188.60 16,330.00 -485,858.60 -97%
Receivables 493,773.71 493,772.62 -1.09 0%
Inventories 3,666,625.96 6,300,011.46 2,633,385.50 72% Step 1 – Gather data/figures of our
Total Current Assets 4,662,588.27 6,810,114.08 2,147,525.81 46%
financial statement in different
Non - Current Assets periods.
Property, Plant and Equipment 102,552,413.37 103,311,466.13 759,052.76 1%
Total Non-Current Assets 102,552,413.37 103,311,466.13 759,052.76 1%
Step 2 – Compute for the change or
Total Assets 107,215,001.64 110,121,580.21 2,906,578.57 3%
increase/decrease in amount of
LIABILITIES each line item. This is done by
Current Liabilities subtracting the previous’ years item
Financial Liabilities
Inter-Agency Payables
731,656.84
43,823.14
313,363.53
241,814.72
-418,293.31
197,991.58
-57%
452%
amount from the current year.
Deferred Credits/Unearned Income 493,772.62 493,772.62 - 0%
Total Current Liabilities 1,269,252.60 1,048,950.87 -220,301.73 -17% Step 3 – Calculate the percentage
Total Liabilities 1,269,252.60 1,048,950.87 -220,301.73 -17% change by dividing the
NET ASSETS/EQUITY
increased/decreased amount by the
Accumulated Surplus/(Deficit) 105,945,749.04 109,072,629.34 3,126,880.30 3% previous/base years’ amount
Total Net Assets/Equity 105,945,749.04 109,072,629.34 3,126,880.30 3%
multiplied by 100.
Total Liabilities and Net Assets/Equity 107,215,001.64 110,121,580.21 2,906,578.57 3%
 Techniques of FS Analysis
Comparative Statement Analysis
Comparative Profit and Loss Analysis / Comparative Income Statement Analysis

Particulars As of June 30, 2021 As of June 30, 2022 Increase/Decrease Increase/Decrease

(Amount) (Percentage)
Revenue
Service and Business Income 39,375,840.53 43,375,007.32
Operating Expenses
Personnel Services 11,865,686.09 12,986,518.95
Maintenance & Operating Expenses 7,625,921.77 6,906,170.89
Non-Cash Expenses 814,972.11 1,132,122.24
Total Operating Expenses 20,306,579.97 21,024,812.08
Net Income/(Loss) 19,069,260.56 22,350,195.24
 Techniques of FS Analysis
Comparative Statement Analysis
Comparative Profit and Loss Analysis / Comparative Income Statement Analysis

Particulars As of June 30, 2021 As of June 30, 2022 Increase/Decrease Increase/Decrease

(Amount) (Percentage)
Revenue
Service and Business Income 39,375,840.53 43,375,007.32 3,999,166.79 10%
Operating Expenses
Personnel Services 11,865,686.09 12,986,518.95 1,120,832.86 9%
Maintenance & Operating Expenses 7,625,921.77 6,906,170.89 -719,750.88 -9%
Non-Cash Expenses 814,972.11 1,132,122.24 317,150.13 39%
Total Operating Expenses 20,306,579.97 21,024,812.08 718,232.11 4%
Net Income/(Loss) 19,069,260.56 22,350,195.24 3,280,934.68 17%
 Techniques of FS Analysis
Trend Analysis
◦ involves the collection of information from multiple time periods and plotting the information on a
horizontal line for further review

◦ May be upward or downward directions which involve the percentage relationship of each and every
item of the statement with the common value of 100%

◦ Only major items are considered for calculating the trend percentage
 Techniques of FS Analysis
Trend Analysis
Steps to prepare a trend Base Year 2018 = 100%
analysis:

Service Revenues Utility Expenses

Step 1 – Select a base year. Year
Amount Trend Percentage Amount Trend Percentage Amoun
Step 2 – Gather data/figures in
different periods.
2018 20,559,498.00 100% 971,472.00 350,311
2019 26,645,251.00 130% 1,255,044.00 406,287
Step 3 – For each line item,
divide the amount in each non-
2020 31,980,696.00 156% 1,588,349.00 504,020
base year by the amount in the 2021 37,299,877.00 181% 1,772,660.00 553,525
base year and multiply by 100.
2022 40,845,783.00 199% 1,959,976.00 637,634
Techniques of FS Analysis
Trend Analysis
Base Year 2018 = 100%

Utility Expenses
Year
Amount Trend Percentage
2018 971,472.00
2019 1,255,044.00
2020 1,588,349.00
2021 1,772,660.00
2022 1,959,976.00
Techniques of FS Analysis
Trend Analysis
Base Year 2018 = 100%

Utility Expenses
Year
Amount Trend Percentage
2018 971,472.00 100%
2019 1,255,044.00 129%
2020 1,588,349.00 163%
2021 1,772,660.00 182%
2022 1,959,976.00 202%
 Techniques of FS Analysis
Common Size Analysis
◦ Simplest method of FS analysis

◦ Figures reported are converted into percentage to some common base

◦ helps to understand the impact of each item in the financial statement and its
contribution to the resulting figure
Techniques of FS Analysis
Common Size Analysis
Common Size Balance Sheet
Techniques of FS Analysis
Common Size Analysis
Common Size Income Statement
Particulars As of June 30, 2022 Percentage

Revenue
Service and Business Income 43,375,007.32
Operating Expenses
Personnel Services 12,986,518.95
Maintenance & Operating 6,906,170.89
Expenses
Non-Cash Expenses 1,132,122.24
Total Operating Expenses 21,024,812.08
Net Income/(Loss) 22,350,195.24
Techniques of FS Analysis
Common Size Analysis
Common Size Income Statement
Particulars As of June 30, 2022 Percentage

Revenue
Service and Business Income 43,375,007.32 100%
Operating Expenses
Personnel Services 12,986,518.95 29.94%
Maintenance & Operating 6,906,170.89 15.92%
Expenses
Non-Cash Expenses 1,132,122.24 2.61%
Total Operating Expenses 21,024,812.08 48.47%
Net Income/(Loss) 22,350,195.24 51.53%