Comparative statements are statements showing the profitability and financial position of a firm for different periods of time in a comparative form. This analysis is also known as horizontal analysis. The figures in these statements can be used for identifying the direction of changes and also the trends in different indicators of performance of an organisation.

The importance of comparative statements lies in their ability to present data for both the current year and the previous year. This allows users to find out not only the balances of accounts but also the extent of increase or decrease between these dates. It shows changes in all items of financial statements in absolute and percentage terms.

With particular reference to a comparative income statement, the statement of profit and loss is prepared by providing columns for figures of two points of time. Absolute figures are listed, and changes are calculated by subtracting the first year from the second year to show absolute increase or decrease.

Finally, the percentage change is calculated to understand the relative impact. This makes it possible to find out summaries of different operational activities of different periods, provided the same accounting principles are used for preparation.