Comparative financial statements provide information to assess the direction of change in the business. To know whether the business is moving in a favorable or unfavorable direction, figures of the current year are compared with those of the previous years.
Dec 27 2012 10:54 AM
Common size financial statements are those in which all items are expressed as a percentage of a base figure, useful for purposes of analyzing trends and changing relationship among financial statement items. For example, all items in each year's income statement could be presented as a percentage of net sales.