Comparative balance sheet refers to comparing the current year balance sheet of a company over previous year balance sheet so as to get an idea how company has performed this year in comparison to previous year. Comparative balance sheet can be prepared in the following way –
- First step for preparing comparative balance sheet is to list all the asset and liabilities of the company.
- Then one has to put in figures of current year assets and liabilities of the company.
- Next step is to put in figures of past year assets and liabilities of the company.
- After putting in assets and liabilities of both current and previous year, one has to calculate absolute change in asset and liabilities (Whether it’s an increase or decrease in assets and liabilities).
- Last step is to calculate percentage change in the assets and liabilities, which can be calculated as Absolute change/Previous year figure *100
These steps have to be followed for calculating each individual asset and liability so that company has an idea how each asset and liability has increased or decreased in both absolute and percentage terms