Question

From the following information of CN Ltd., prepare a common size Statement of Profit and Loss for the years ended 31st March, 2023 and 31st March, 2024 :

Statement of Profit (in ₹)

Particulars	2023–24 (₹)	2022–23 (₹)
Revenue from Operations	40,00,000	20,00,000
Less: Purchase of Stock-in-Trade	8,00,000	4,00,000
Less: Other Expenses	4,00,000	2,00,000
Profit Before Tax	28,00,000	14,00,000
Less: Tax @ 50%	14,00,000	7,00,000
Net Profit After Tax	14,00,000	7,00,000

Hint:

Always calculate items in common size statements as percentage of revenue to analyse efficiency and cost structure across years.

Answer 1

Step 1: Compute Total Profit Before Tax
For 2023-24:
Gross Profit = ₹ 40,00,000 – ₹ 8,00,000 – ₹ 4,00,000 = ₹ 28,00,000
Tax = 50% × ₹ 28,00,000 = ₹ 14,00,000
Profit After Tax = ₹ 14,00,000 For 2022-23:
Gross Profit = ₹ 20,00,000 – ₹ 4,00,000 – ₹ 2,00,000 = ₹ 14,00,000
Tax = 50% × ₹ 14,00,000 = ₹ 7,00,000
Profit After Tax = ₹ 7,00,000

Step 2: Common Size Statement

Particulars	2023–24 (%)	2022–23 (%)
Revenue from Operations	100.00	100.00
Purchase of Stock-in-Trade	20.00	20.00
Other Expenses	10.00	10.00
Profit Before Tax	70.00	70.00
Tax @ 50%	35.00	35.00
Profit After Tax	35.00	35.00

Explanation: All items are expressed as a percentage of Revenue from Operations (assumed as base = 100%). The profitability structure remained unchanged across both years.