Question

From the following information, prepare a Common Size Statement of Profit and Loss of A Ltd. and B Ltd. for the year ended 31^st March, 2023:

Hint:

For a Common Size Statement, express all figures as a percentage of Revenue from Operations to enable comparison across companies.

Answer 1

Common Size Statement of Profit and Loss: 

Explanation: Common size percentages are calculated by expressing each item as a percentage of Revenue from Operations: 

1. Other Income: \[ \frac{{Other Income}}{{Revenue from Operations}} \times 100 \] For A Ltd: \[ \frac{3,00,000}{20,00,000} \times 100 = 15\% \] For B Ltd: \[ \frac{80,000}{10,00,000} \times 100 = 8\% \] 

2. Expenses: \[ \frac{{Expenses}}{{Revenue from Operations}} \times 100 \] For A Ltd: \[ \frac{10,40,000}{20,00,000} \times 100 = 52\% \] For B Ltd: \[ \frac{4,80,000}{10,00,000} \times 100 = 48\% \]

3. Profit Before Tax: \[ {Revenue - Other Income - Expenses (as a \% of Revenue)} \]