Prepare a Common Size balance sheet from the following balance sheet of Aditya Ltd., and Anjali Ltd.:
| Particulars | Aditya Ltd. (Rs.) | Anjali Ltd. (Rs.) |
|---|---|---|
| I. Equity and Liabilities | ||
| 1. Shareholder’s Funds | ||
| a) Equity share capital | 6,00,000 | 8,00,000 |
| b) Reserves and surplus | 3,00,000 | 2,50,000 |
| 2. Current liabilities | 1,00,000 | 1,50,000 |
| Total | 10,00,000 | 12,00,000 |
| II. Assets | ||
| 1. Non current assets | ||
| a) Fixed assets | 4,00,000 | 7,00,000 |
| 2. Current assets | 6,00,000 | 5,00,000 |
| Total | 1,00,0000 | 12,00,000 |
Common Size Balance Sheet of Aditya Ltd. and Anjali Ltd.
| Particulars | Aditya Ltd. (Rs.) | Aditya Ltd. (%) | Anjali Ltd. (Rs.) | Anjali Ltd. (%) |
|---|---|---|---|---|
| I. Equity and Liabilities | ||||
| 1. Shareholder’s Funds | ||||
| a) Equity share capital | 6,00,000 | 60.00 | 8,00,000 | 66.67 |
| b) Reserves and surplus | 3,00,000 | 30.00 | 2,50,000 | 20.83 |
| 2. Current liabilities | 1,00,000 | 10.00 | 1,50,000 | 12.50 |
| Total | 10,00,000 | 100.00 | 12,00,000 | 100.00 |
| II. Assets | ||||
| 1. Non current assets | ||||
| a) Fixed assets | 4,00,000 | 40.00 | 7,00,000 | 58.33 |
| 2. Current assets | 6,00,000 | 60.00 | 5,00,000 | 41.67 |
| Total | 10,00,000 | 100.00 | 12,00,000 | 100.00 |
Note: The total assets for Aditya Ltd. in the textbook context contained a typo (1,00,0000), which has been corrected to 10,00,000 based on the summation of liabilities and assets.
Explanation
A Common Size Balance Sheet is a vertical statement in which each item is expressed as a percentage of the total (Total Assets or Total Liabilities). The total is always taken as 100. This allows for comparison between two companies of different sizes by standardizing the figures.
Solution Steps
Step 1: Determine the Total for each company. For Aditya Ltd., the total is Rs. 10,00,000 (correcting the typo in text). For Anjali Ltd., the total is Rs. 12,00,000.
Step 2: Calculate the percentage for each item using the formula: (Item Amount / Total Amount) × 100.
Step 3: For Aditya Ltd., Equity Share Capital % = (6,00,000 / 10,00,000) × 100 = 60%. Fixed Assets % = (4,00,000 / 10,00,000) × 100 = 40%.
Step 4: For Anjali Ltd., Equity Share Capital % = (8,00,000 / 12,00,000) × 100 = 66.67%. Fixed Assets % = (7,00,000 / 12,00,000) × 100 = 58.33%.
Step 5: Verify that the sum of percentages for Assets and Liabilities equals 100% for both companies.