Question

From the following information of NK Ltd., prepare a Common Size Statement of Profit and Loss for the years ended 31st March, 2022 and 31st March, 2023: \[ \begin{array}{|l|c|c|} \hline \textbf{Particulars} & \textbf{31.03.2023 (₹)} & \textbf{31.03.2022 (₹)} \\ \hline \text{Revenue from Operations} & 25,00,000 & 20,00,000 \\ \text{Cost of Materials Consumed} & 8,00,000 & 6,00,000 \\ \text{Employee Benefit Expenses} & 4,00,000 & 4,00,000 \\ \text{Income Tax Rate} & 20\% & 20\% \\ \hline \end{array} \] Common Size Statement of Profit and Loss for NK Ltd.

Hint:

In a Common Size Statement, each item is expressed as a percentage of the total (in this case, Revenue from Operations) to assess its proportion in the financial statement.

Answer 1

To prepare the Common Size Statement of Profit and Loss, we express each line item as a percentage of revenue from operations. The formula for each item is:

Common Size Percentage:
Common Size Percentage = (Item / Revenue from Operations) × 100

Cost of Materials Consumed (2023): \( \frac{8,00,000}{25,00,000} \times 100 = 32\% \)
Cost of Materials Consumed (2022): \( \frac{6,00,000}{20,00,000} \times 100 = 30\% \)
Employee Benefit Expenses (2023): \( \frac{4,00,000}{25,00,000} \times 100 = 16\% \)
Employee Benefit Expenses (2022): \( \frac{4,00,000}{20,00,000} \times 100 = 20\% \)
Income Tax (2023): \( \frac{20\%}{20\%} = 20\% \)