Common Size Analysis and Trend Analysis of Income Statement & Balance Sheet

October 22, 2026 28 views admin
Common Size Analysis and Trend Analysis of Income Statement & Balance Sheet Common Size Analysis Trend Analysis Common Size Analysis of Income Statement & Balance Sheet Trend Analysis of Income Statement & Balance Sheet

Common Size Analysis and Trend Analysis — Complete User Guide — Two Accounts Web

Comprehensive guide for producing and interpreting the Common Size Analysis of the Balance Sheet and Income Statement, and the Balance Sheet and Income Statement Trend Analysis — the four vertical-analysis reports that turn absolute figures into ratios that can be compared across periods, divisions and businesses

Table of Contents

  1. What Are Common Size Analysis and Trend Analysis?
  2. Finding the Reports
  3. Field-by-Field Guide
  4. How the Calculations Work
  5. Drill-Down Capabilities
  6. Sample Data and Report Output
  7. Common Issues and Solutions
  8. Accounting Regulation Compliance

1. What Are Common Size Analysis and Trend Analysis?

A common size statement restates every line of a statement as a percentage of a single base total. A trend statement places two periods side by side and measures the movement between them. Together they turn absolute figures into ratios that can be compared across periods and businesses.

It restates every line of a statement as a percentage of a single meaningful base, so that periods of different size, divisions of different size, and companies of different size can be compared directly. Two reports in this guide do exactly that.

1.1 Common Size Analysis

A common size statement expresses every line item as a percentage of a single base total. In this system the base is chosen to match the statement:

Statement Base Amount Result
Balance Sheet Total assets Every asset, liability and equity line as a percentage of total assets
Income Statement Total income Every income, expense and profit line as a percentage of total income

Each period appears as an amount / percent pair of columns, so you can read the absolute figure and its share of the base side by side.

Why percentages matter: A balance sheet that shows receivables of 122,460 looks unremarkable in isolation. Shown as a percentage of assets it becomes 18.48% — a collection-efficiency measure that can be trended, benchmarked and compared with a competitor or a budget.

1.2 Trend Analysis

A trend analysis places two periods side by side and measures the movement between them. Each line item is shown with four columns:

Base Period      Comparison Period     Change          Percent
(current)        (prior)               (difference)    (% movement)

The percentage is always measured against the prior period, which is the standard convention for growth rates. A movement from 486,500 to 612,300 is reported as +25.86%, not as 20.56% of the new figure.

1.3 The Four Reports at a Glance

Report Statement Base Periods Compared Columns Produced
Common Size Analysis of Balance Sheet Balance Sheet Total assets Two or more point-in-time dates Amount + Percent per date
Common Size Analysis of Income Statement Income Statement Total income Two or more date ranges Amount + Percent per range
Balance Sheet Trend Analysis Balance Sheet As-at date Two as-at dates per comparison Base, Comparison, Change, Percent
Income Statement Trend Analysis Income Statement Date range Two date ranges per comparison Base, Comparison, Change, Percent
Note: The two report families are independent of one another. A common size statement answers "what share of the whole?"; a trend statement answers "which way, and by how much?". They can be produced side by side on the same data, and they are complementary — the combination of a rising percentage and a rising amount is the strongest possible evidence of genuine growth.

2. Finding the Reports

Open the business, go to the Reports tab, and you will find two dedicated categories on the reports index page:

Category Reports
Common Size Analysis Common Size Analysis of Balance Sheet
Common Size Analysis of Income Statement
Trend Analysis Balance Sheet Trend Analysis
Income Statement Trend Analysis

Each report opens a list of saved configurations. Use New Report to create one, the row's View action to run it, and the row's Edit action to change it. The list itself summarises each saved report:

Report List Columns
Common Size Analysis of Balance Sheet Date, Accounting Method, Description
Common Size Analysis of Income Statement From Date, To Date, Accounting Method, Description
Balance Sheet Trend Analysis Date, Comparison Date, Accounting Method, Description
Income Statement Trend Analysis From Date, To Date, Accounting Method, Description

The Accounting Method column only appears when the business has sales invoices or purchase invoices, because cash-basis conversion only applies to invoice-driven revenue and purchases.

3. Field-by-Field Guide

3.1 Common Size Analysis of Balance Sheet

This report restates the balance sheet at one or more as-at dates, with every line expressed as a percentage of total assets.

Comparative Columns

The Periods grid holds one row per balance sheet date. Each row has three fields:

Field Meaning
Date The as-at date of the balance sheet. The balance is the cumulative ledger position of every balance sheet account up to and including this date.
Division Optional tracking code. Leave empty for the whole business; choose a division to report only that division's balances.
Column name Optional label for the column. If left empty the date itself is used as the heading.

Use Add new comparative column to add further dates. The first date column is printed in bold, marking it as the primary column.

Layout

The Layout setting controls the arrangement of the three top-level sections. The three choices are:

Layout Arrangement
Assets − Liabilities = Equity Assets and liabilities are combined into a single "Net assets" block, with equity shown separately below.
Assets = Liabilities + Equity Assets on top, then a combined "Total liabilities and equity" block. The most common presentation.
Assets = Equity + Liabilities Assets on top, then equity followed by liabilities inside the combined block.

The layout affects the sign of the sub-totals and their percentages, but never the underlying figures or the percentages of the individual account lines. See section 4.10.

3.2 Common Size Analysis of Income Statement

This report restates the income statement for one or more date ranges, with every line expressed as a percentage of total income.

Comparative Columns

Each row of the Periods grid carries four fields:

Field Meaning
From Date Start of the income period.
To Date End of the income period. Both dates are inclusive.
Division Optional tracking code. Leave empty for the whole business.
Column name Optional label for the column. If left empty the period end date is used as the heading.
Choosing the column heading — for the income statement the default heading is the period end date. If you are comparing calendar years, it is usually clearer to name the columns "FY2024" and "FY2025" explicitly using the column name field.

For the income statement, the column heading also becomes the basis for the report subtitle, which reads "For the period from {first period start} to {last period end}".

3.3 Balance Sheet Trend Analysis

This report compares two balance sheet dates for each comparison row.

Comparative Columns

The Comparisons grid holds one row per pair of dates. Each row contains:

Field Meaning
Division Optional tracking code applied to both dates in the row.
Column name Optional label. When empty, the as-at date is used as the heading.
Base Period → As of Date The current date. Its column is printed in bold.
Base Period → Column name Optional label for the base column.
Comparison Period → As of Date The prior date to compare against.
Comparison Period → Column name Optional label for the comparison column.

Each comparison row produces four columns: the base date, the comparison date, the change, and the percentage change. Use Add new comparative column to add further pairs — for example, three years of balances in one report.

The report subtitle reads "As at {base date of the first comparison}".

3.4 Income Statement Trend Analysis

This report compares two income periods for each comparison row.

Comparative Columns

The Comparisons grid holds one row per pair of periods:

Field Meaning
Division Optional tracking code applied to both periods in the row.
Column name Optional label. When empty, the year of the period start date is used as the heading (for example, "Year 2025").
Base Period → From Date / To Date The current period. Its column is printed in bold.
Comparison Period → From Date / To Date The prior period to compare against.

Each comparison row produces four columns: the base period, the comparison period, the change, and the percentage change.

The report subtitle reads "For the period from {base period start} to {base period end}", taken from the first comparison row.

3.5 Shared Header Fields

All four reports share the same header fields, in addition to their period grid.

Field Meaning
Title Optional report heading printed above the statement. When empty, the report's own name is used.
Description Optional free-text note stored with the report and shown in the report list. Useful for identifying a configuration later.
Accounting Method Accrual Basis or Cash Basis. See section 4.7.
Rounding When On, amounts are displayed as whole numbers. The percentage calculations always use the full-precision underlying figures, so rounding the display never changes a ratio.
Groups to Collapse Select balance sheet groups (for the balance sheet reports) or income statement groups (for the income statement reports) to collapse by default. A collapsed group heading becomes a link that opens the group on its own, and the totals remain visible underneath.
Footer Optional text printed below the statement. Simple Markdown is supported, so you can bold, italicise and bullet the footer.
Account Codes When On, each account line is prefixed with its account code as well as its name.
Exclude Zero Balances When On, accounts with a zero balance in every column are removed from the report. Inactive accounts are always removed when they are zero.
Show column name in percent column When On, the percentage column heading repeats the name of the column it belongs to (for example, "FY2025 Percent" or "31 Dec 2025 Percent") instead of a generic "Percent". For trend analysis this also labels the change column.

4. How the Calculations Work

4.1 Common Size — the Base Amount

The base is read once per period, from the untouched amount columns of the statement itself, before any percentage is applied. This matters: it guarantees the base is the exact total of the statement rather than a re-summed collection of already-rounded percentages.

Statement Base Behaviour when the base group is missing
Balance Sheet The total of the Assets group at that date Every percentage cell is left empty
Income Statement The total of the Income group for that period. If no group named Income exists, the first non-expense group is used instead Every percentage cell is left empty
Important: The percentage base is always taken as an absolute value. If a period has a negative base — for example, a division running at a net loss, or a balance sheet with a small negative equity — the percentages are still calculated against the magnitude of that base, and the sign of each line is preserved. A negative percentage therefore always means "this line runs opposite to the direction of the base", not "this calculation is wrong".

4.2 Common Size — the Percentage Formula

Percentage = Amount ÷ ( |Base| ÷ 100 )      rounded to the currency's decimal places

Equivalently: Percentage = Amount ÷ |Base| × 100.

Aspect Rule
Rounding Midpoints are rounded away from zero. Two decimal places by default, matching the base currency's decimal places setting.
Base of zero No percentage is produced. The percentage cell is left empty rather than showing an error or a divide-by-zero result.
Sign The percentage is derived from the same signed amount as the figure it sits beside, so the printed percentage always carries the same sign as the printed amount. Expense groups and liability sections are presented as positive amounts, and their percentages are positive to match. A section presented as a deduction carries a negative percentage.
Group totals A group's percentage is calculated from the group's own total amount, not by adding up the percentages of its children. Children may therefore add to slightly more or less than 100% because of rounding.
Subtotal rows A subtotal row's percentage is calculated from the running total of all lines above it, expressed against the same base.

4.3 Common Size — Column Pairing

Each period produces exactly two columns: the amount and then its percentage. The pairing is fixed:

Period 1 Amount | Period 1 Percent | Period 2 Amount | Period 2 Percent | ...

The first period's pair is printed in bold, marking it as the primary column pair. The percentage column of a period is always computed against that same period's own base — each period is a self-contained vertical analysis, never a comparison against another period. Use the trend analysis reports when you need the comparison.

4.4 Trend Analysis — the Four Columns

Base Period        Comparison Period   Change            Percent
current period     prior period       current − prior   (change ÷ |prior|) × 100
Column Content
Base Period The amount for the current period or date. Printed in bold.
Comparison Period The amount for the prior period or date.
Change Base period minus comparison period. A zero change is printed as a dash.
Percent The percentage movement, measured against the comparison period. Only account lines carry a percentage; group total and subtotal rows leave the percentage column blank.
Reading a trend column — the base period is deliberately shown on the left and the prior period on the right, with the change and percentage following. This is the presentation used in management accounts and matches the comparative format required for statutory financial statements: the current period first, the comparative second.
Why subtotals have no percentage — a percentage of a subtotal measures the subtotal against a base, which is a different measure from the percentages of the individual lines that make it up. The trend report therefore fills the percentage column for account lines only, and leaves it blank for group totals and subtotal rows. The change column is still totalled for those rows, because a difference of totals is a valid and useful figure.

4.5 Trend Analysis — the Percentage Formula

Change   = Base Period − Comparison Period
Percent  = ( Change ÷ |Comparison Period| ) × 100      rounded to the currency's decimal places
Aspect Rule
Denominator Always the comparison (prior) period. This is the standard growth-rate denominator and makes successive periods directly comparable.
Sign The comparison period's amount is taken as an absolute value in the denominator, so the sign of the percentage always follows the sign of the change. A fall is negative, a rise is positive.
Expenses and liabilities These are printed as positive amounts, and the change and percentage follow the same presentation. For an expense, a positive percentage means the cost has grown.
Group and subtotal rows Amounts and change are totalled; the percentage column is left blank for these rows, because a percentage of a total is a different measure from the percentages of its parts.

4.6 Trend Analysis — Zero and No-Change Cases

Situation Displayed Result
Comparison period is zero and the base period is not Percentage shows a dash. A growth rate from zero is mathematically undefined, so no percentage is presented.
Comparison period is zero and the base period is also zero Percentage shows a dash. There is nothing to measure.
Change is exactly zero Change column shows a dash, and the percentage cell is left blank — a nil movement is reported as no movement rather than as 0.00%.

4.7 Accrual Basis vs Cash Basis

The Accounting Method setting affects how invoice-driven revenue and purchases are recognised:

Method Effect
Accrual Basis Revenue is recognised when the invoice is raised and purchases when they are received, regardless of when cash moved. This is the statutory default.
Cash Basis Sales invoices and purchase invoices are matched to their cash receipts and payments, and converted before the amounts are totalled. Balance sheet amounts are restated on the same basis.

Cash basis is useful for cash-flow-oriented management review. It is not a substitute for statutory reporting, and the report subtitle always states which basis is in force whenever the business has invoices.

4.8 Division Filtering

Every period or comparison row can be restricted to a single tracking code (division). When a division is selected, only transactions carrying that division are included, and the balance is built from those transactions alone.

Report Filtering Behaviour
Common Size Analysis of Balance Sheet The division is applied to each date independently, so a report may compare one division across several dates, or compare different divisions across different dates.
Common Size Analysis of Income Statement The division is applied to each period independently.
Balance Sheet Trend Analysis One division per comparison row, applied to both dates in that row.
Income Statement Trend Analysis One division per comparison row, applied to both periods in that row.
Note: When a division is selected for the balance sheet, the inter-divisional balance is neutralised so that the division's statement stands on its own rather than carrying an unmatched counterpart balance. The inter-divisional loan line is therefore shown at nil for a filtered division.

4.9 Group Totals and Subtotal Rows

Both common size reports print subtotal rows that are defined on the chart of accounts (for example "Gross Profit" and the final profit or loss total). These rows show a running total of every line above them in the statement, which is why the profit total row correctly sums income and expenses together.

Each subtotal row also carries a percentage, computed from that running total against the statement base. In the income statement this makes the gross profit margin and the net profit margin directly readable off the report.

4.10 Balance Sheet Layouts and Sign Conventions

Assets are debit balances and are always printed as positive figures. Liabilities and equity are credit balances, and the layout decides how they are presented.

The percentage always follows the amount it belongs to: a line presented as a deduction carries a negative percentage, and a line presented as a positive carries a positive percentage. In every layout the individual account percentages are unchanged.

Layout Presentation
Assets − Liabilities = Equity The assets and liabilities blocks are combined into a single "Net assets" block. The liabilities subtotal is presented as a deduction, that is, as a negative figure in parentheses, so that Net assets equals assets less liabilities. Equity is shown separately below as a positive total, so the two may be compared directly.
Assets = Liabilities + Equity Assets are shown as a positive total. The liabilities and equity block is presented as a positive total, and the combined "Total liabilities & equity" figure equals total assets with a percentage of 100% of assets.
Assets = Equity + Liabilities As above, with equity printed before liabilities inside the combined block.

Within the liabilities and equity block the individual account lines are always positive, whatever the layout. Only the subtotal of a section that the layout presents as a deduction is shown in parentheses.

4.11 Zero, Negative and Rounding Behaviour

Situation Displayed Result
Account with no balance in a period The amount is printed as a dash and the percentage reads 0.00%.
Account with a zero balance in every column, with Exclude Zero Balances on The line is removed entirely.
Inactive account with a zero balance The line is removed from the report regardless of the Exclude Zero Balances setting.
Base amount is zero in a period No percentages are produced for that period. Amounts are still shown normally.
Negative amount Printed in parentheses, and the percentage carries the same sign.
Rounding set to On Amounts are printed as whole numbers. Percentages continue to be calculated from the unrounded amounts, so the ratios remain accurate.

5. Drill-Down Capabilities

Both report families support drill-down from any figure back to the transactions that produced it.

Report Drill-Down Available
Common Size Analysis of Balance Sheet Every amount cell links to the balance sheet transactions for that account, up to that as-at date, for the division shown.
Common Size Analysis of Income Statement Every amount cell links to the income statement transactions for that account, for that date range and division.
Balance Sheet Trend Analysis The base and comparison amount cells each link to the transactions for that account at the relevant as-at date.
Income Statement Trend Analysis The base and comparison amount cells each link to the transactions for that account in the relevant period.

The Change and Percent columns are computed values and do not open a transaction list — they are derived from the two periods that do.

Group totals in the balance sheet reports can also be opened on their own. Where a group heading is collapsed, clicking the heading opens the group as a focused sub-report with its own header, which is the quickest way to review one section of a long statement.

6. Sample Data and Report Output

The following worked example is used to validate all four reports. It is a small trading business with two full financial years of activity, and it is deliberately constructed so that every figure can be verified by hand.

6.1 Sample Chart of Accounts

Statement Group Account Type
Balance Sheet Assets Cash at Bank Asset
Balance Sheet Assets Accounts Receivable Asset
Balance Sheet Assets Inventory Asset
Balance Sheet Assets Equipment Asset
Balance Sheet Liabilities Accounts Payable Liability
Balance Sheet Liabilities Bank Loan Liability
Balance Sheet Equity Share Capital Equity
Balance Sheet Equity Retained Earnings Equity
Income Statement Income Sales Revenue Income
Income Statement Cost of Sales (expense group) Cost of Goods Sold Expense
Income Statement Operating Expenses (expense group) Rent Expense Expense
Income Statement Operating Expenses (expense group) Salaries Expense Expense

The income statement also carries two subtotal rows: Gross Profit after Cost of Sales, and Net Profit at the foot of the statement. The groups appear in the order Income, Cost of Sales, Gross Profit, Operating Expenses, Net Profit.

A group is given a printed total only when it contains more than one line. Income and Cost of Sales each contain a single account, so no group total is printed for them; Operating Expenses contains two accounts, so it does carry a total.

6.2 Opening Balances and Year One Activity

Opening Balances — 1 January 2024

Account Debit Credit
Cash at Bank 266,350 —
Equipment 200,000 —
Bank Loan — 120,000
Share Capital — 300,000
Retained Earnings — 46,350
Total 466,350 466,350

Year One Activity — FY2024

Transaction Debit Account Credit Account Amount
Credit sales Accounts Receivable Sales Revenue 486,500
Customer collections Cash at Bank Accounts Receivable 389,200
Credit purchases Inventory Accounts Payable 437,900
Supplier payments Accounts Payable Cash at Bank 389,600
Cost of goods sold Cost of Goods Sold Inventory 291,900
Rent paid Rent Expense Cash at Bank 48,650
Salaries paid Salaries Expense Cash at Bank 97,300

Closing balances at 31 December 2024:

Account Balance
Cash at Bank 266,350 + 389,200 − 389,600 − 48,650 − 97,300 = 120,000
Accounts Receivable 486,500 − 389,200 = 97,300
Inventory 437,900 − 291,900 = 146,000
Equipment 200,000
Accounts Payable 437,900 − 389,600 = 48,300
Bank Loan 120,000
Share Capital 300,000
Retained Earnings 46,350 + 48,650 (FY2024 profit) = 95,000

FY2024 profit: 486,500 − 291,900 − 48,650 − 97,300 = 48,650

6.3 Year Two Activity

Transaction Debit Account Credit Account Amount
Credit sales Accounts Receivable Sales Revenue 612,300
Customer collections Cash at Bank Accounts Receivable 587,140
Credit purchases Inventory Accounts Payable 384,611
Supplier payments Accounts Payable Cash at Bank 358,827
Cost of goods sold Cost of Goods Sold Inventory 349,011
Rent paid Rent Expense Cash at Bank 55,107
Salaries paid Salaries Expense Cash at Bank 134,706

Closing balances at 31 December 2025:

Account Balance
Cash at Bank 120,000 + 587,140 − 358,827 − 55,107 − 134,706 = 158,500
Accounts Receivable 97,300 + 612,300 − 587,140 = 122,460
Inventory 146,000 + 384,611 − 349,011 = 181,600
Equipment 200,000
Accounts Payable 48,300 + 384,611 − 358,827 = 74,084
Bank Loan 120,000
Share Capital 300,000
Retained Earnings 95,000 + 73,476 (FY2025 profit) = 168,476

FY2025 profit: 612,300 − 349,011 − 55,107 − 134,706 = 73,476

6.4 Trial Balance Verification

Before reading any ratio, confirm that the data behind it balances.

Balance Sheet Trial Balance at 31 December 2024

Account Debit Credit
Cash at Bank 120,000 —
Accounts Receivable 97,300 —
Inventory 146,000 —
Equipment 200,000 —
Accounts Payable — 48,300
Bank Loan — 120,000
Share Capital — 300,000
Retained Earnings — 95,000
Total 563,300 563,300

Balance Sheet Trial Balance at 31 December 2025

Account Debit Credit
Cash at Bank 158,500 —
Accounts Receivable 122,460 —
Inventory 181,600 —
Equipment 200,000 —
Accounts Payable — 74,084
Bank Loan — 120,000
Share Capital — 300,000
Retained Earnings — 168,476
Total 662,560 662,560

Income Statement Period Trial Balance

Period Total Debits (Expenses) Total Credits (Income) Profit
FY2024 437,850 486,500 48,650
FY2025 538,824 612,300 73,476

FY2024 debits: 291,900 + 48,650 + 97,300 = 437,850.    FY2025 debits: 349,011 + 55,107 + 134,706 = 538,824.

6.5 Common Size Analysis of Income Statement — Output

Configuration: two columns — FY2024 (1 Jan 2024 to 31 Dec 2024) and FY2025 (1 Jan 2025 to 31 Dec 2025). Base = total income of each period.

Common Size Analysis of Income Statement — ABC Trading
For the period from 01-Jan-2024 to 31-Dec-2025

                                             FY2024               FY2025
                                        Amount      Percent   Amount      Percent
                                   ─────────    ────────  ─────────    ────────
INCOME
  Sales Revenue                   486,500.00   100.00%  612,300.00   100.00%

Cost of Sales
  Cost of Goods Sold              291,900.00    60.00%  349,011.00    57.00%

Gross Profit                      194,600.00    40.00%  263,289.00    43.00%

Operating Expenses
  Rent Expense                     48,650.00    10.00%   55,107.00     9.00%
  Salaries Expense                 97,300.00    20.00%  134,706.00    22.00%
  Total — Operating Expenses      145,950.00    30.00%  189,813.00    31.00%

Net Profit                         48,650.00    10.00%   73,476.00    12.00%

Each period's percentages are calculated against that period's own total income, so the FY2024 and FY2025 columns are two independent vertical analyses.

6.6 Common Size Analysis of Balance Sheet — Output

Configuration: two columns — 31 Dec 2024 and 31 Dec 2025. Layout: Assets = Liabilities + Equity. Base = total assets of each date.

Common Size Analysis of Balance Sheet — ABC Trading
As at 31-Dec-2025

                                     31-Dec-2024            31-Dec-2025
                                Amount      Percent      Amount      Percent
                           ─────────    ────────    ─────────    ────────
Assets
  Cash at Bank              120,000.00    21.30%    158,500.00    23.92%
  Accounts Receivable        97,300.00    17.27%    122,460.00    18.48%
  Inventory                 146,000.00    25.92%    181,600.00    27.41%
  Equipment                 200,000.00    35.51%    200,000.00    30.19%
  Total — Assets            563,300.00   100.00%    662,560.00   100.00%

  Total assets              563,300.00   100.00%    662,560.00   100.00%

Liabilities
  Accounts Payable           48,300.00     8.57%     74,084.00    11.18%
  Bank Loan                 120,000.00    21.30%    120,000.00    18.11%
  Total — Liabilities       168,300.00    29.88%    194,084.00    29.29%

Equity
  Share Capital             300,000.00    53.26%    300,000.00    45.28%
  Retained Earnings          95,000.00    16.86%    168,476.00    25.43%
  Total — Equity            395,000.00    70.12%    468,476.00    70.71%

  Total liabilities & equity
                            563,300.00   100.00%    662,560.00   100.00%

Under this layout the liabilities and equity block is presented as a positive total that equals total assets, and its percentage is 100% of total assets. The individual account percentages are identical under every layout.

6.7 Income Statement Trend Analysis — Output

Configuration: one comparison — base period FY2025, comparison period FY2024.

Income Statement Trend Analysis — ABC Trading
For the period from 01-Jan-2025 to 31-Dec-2025

                           Year 2025    Year 2024       Change      Percent
                       ───────────  ───────────  ───────────  ──────────
INCOME
  Sales Revenue          612,300.00  486,500.00   125,800.00     25.86%

Cost of Sales
  Cost of Goods Sold     349,011.00  291,900.00    57,111.00     19.57%

Gross Profit            263,289.00  194,600.00    68,689.00

Operating Expenses
  Rent Expense            55,107.00   48,650.00     6,457.00     13.27%
  Salaries Expense       134,706.00   97,300.00    37,406.00     38.44%
  Total — Operating Expenses
                         189,813.00  145,950.00    43,863.00

Net Profit               73,476.00   48,650.00    24,826.00

Note that expenses are printed as positive amounts and their percentage is the percentage increase in cost. The gross profit, operating expense total and net profit rows show the amount and the change, but no percentage, because a percentage of a subtotal is a different measure from the percentages of the lines that make it up.

6.8 Balance Sheet Trend Analysis — Output

Configuration: one comparison — base date 31 Dec 2025, comparison date 31 Dec 2024.

Balance Sheet Trend Analysis — ABC Trading
As at 31-Dec-2025

                        31-Dec-2025    31-Dec-2024       Change      Percent
                    ─────────────  ─────────────  ───────────  ──────────
Assets
  Cash at Bank          158,500.00    120,000.00    38,500.00     32.08%
  Accounts Receivable   122,460.00     97,300.00    25,160.00     25.86%
  Inventory             181,600.00    146,000.00    35,600.00     24.38%
  Equipment             200,000.00    200,000.00            -
  Total — Assets        662,560.00    563,300.00    99,260.00

  Total assets          662,560.00    563,300.00    99,260.00

Liabilities
  Accounts Payable       74,084.00     48,300.00    25,784.00     53.38%
  Bank Loan             120,000.00    120,000.00            -
  Total — Liabilities    194,084.00    168,300.00    25,784.00

Equity
  Share Capital         300,000.00    300,000.00            -
  Retained Earnings     168,476.00     95,000.00    73,476.00     77.34%
  Total — Equity         468,476.00    395,000.00    73,476.00

  Total liabilities & equity
                        662,560.00    563,300.00    99,260.00

Equipment, the bank loan and share capital did not move. Their change column shows a dash and their percentage cell is left blank, because a nil movement carries no percentage. The group total rows carry a change but no percentage, for the same reason described in section 4.4.

6.9 Calculation

COMMON SIZE — INCOME STATEMENT
  Base FY2024 = 486,500.00
    Sales Revenue      486,500 / 486,500 = 100.00% ✓
    Cost of Goods Sold 291,900 / 486,500 =  60.00% ✓
    Gross Profit       194,600 / 486,500 =  40.00% ✓
    Rent Expense        48,650 / 486,500 =  10.00% ✓
    Salaries Expense    97,300 / 486,500 =  20.00% ✓
    Net Profit          48,650 / 486,500 =  10.00% ✓

  Base FY2025 = 612,300.00
    Sales Revenue      612,300 / 612,300 = 100.00% ✓
    Cost of Goods Sold 349,011 / 612,300 =  57.00% ✓
    Gross Profit       263,289 / 612,300 =  43.00% ✓
    Rent Expense        55,107 / 612,300 =   9.00% ✓
    Salaries Expense   134,706 / 612,300 =  22.00% ✓
    Net Profit          73,476 / 612,300 =  12.00% ✓

  Cost ratio improved from 60.00% to 57.00% ✓
  Net margin improved from 10.00% to 12.00% ✓

COMMON SIZE — BALANCE SHEET
  Base 31-Dec-2024 = 563,300.00
    Cash at Bank       120,000 / 563,300 = 21.30% ✓
    Accounts Receivable 97,300 / 563,300 = 17.27% ✓
    Inventory          146,000 / 563,300 = 25.92% ✓
    Equipment          200,000 / 563,300 = 35.51% ✓
    Total assets       563,300 / 563,300 = 100.00% ✓
    Accounts Payable    48,300 / 563,300 =  8.57% ✓
    Bank Loan          120,000 / 563,300 = 21.30% ✓
    Total liabilities  168,300 / 563,300 = 29.88% ✓
    Share Capital      300,000 / 563,300 = 53.26% ✓
    Retained Earnings   95,000 / 563,300 = 16.86% ✓
    Total equity       395,000 / 563,300 = 70.12% ✓

    Assets 21.30 + 17.27 + 25.92 + 35.51 = 100.00% ✓
    Liabilities 29.88% + equity 70.12% = 100.00% ✓

  Base 31-Dec-2025 = 662,560.00
    Cash at Bank       158,500 / 662,560 = 23.92% ✓
    Accounts Receivable 122,460 / 662,560 = 18.48% ✓
    Inventory          181,600 / 662,560 = 27.41% ✓
    Equipment          200,000 / 662,560 = 30.19% ✓
    Accounts Payable    74,084 / 662,560 = 11.18% ✓
    Bank Loan          120,000 / 662,560 = 18.11% ✓
    Total liabilities  194,084 / 662,560 = 29.29% ✓
    Share Capital      300,000 / 662,560 = 45.28% ✓
    Retained Earnings  168,476 / 662,560 = 25.43% ✓
    Total equity       468,476 / 662,560 = 70.71% ✓

    Assets 23.92 + 18.48 + 27.41 + 30.19 = 100.00% ✓
    Liabilities 29.29% + equity 70.71% = 100.00% ✓

TREND — INCOME STATEMENT (account lines only; subtotals carry no percentage)
    Sales Revenue   (612,300 − 486,500) / 486,500 = 25.86% ✓
    Cost of Goods Sold (349,011 − 291,900) / 291,900 = 19.57% ✓
    Rent Expense    (55,107 − 48,650) / 48,650 = 13.27% ✓
    Salaries Expense (134,706 − 97,300) / 97,300 = 38.44% ✓

    For information, the movement in the subtotal rows:
      Gross Profit   (263,289 − 194,600) = 68,689
      Operating Expenses (189,813 − 145,950) = 43,863
      Net Profit     (73,476 − 48,650) = 24,826

TREND — BALANCE SHEET (account lines only; subtotals carry no percentage)
    Cash at Bank    (158,500 − 120,000) / 120,000 = 32.08% ✓
    Accounts Receivable (122,460 − 97,300) / 97,300 = 25.86% ✓
    Inventory       (181,600 − 146,000) / 146,000 = 24.38% ✓
    Accounts Payable (74,084 − 48,300) / 48,300 = 53.38% ✓
    Retained Earnings (168,476 − 95,000) / 95,000 = 77.34% ✓

    Equipment, Bank Loan and Share Capital did not move, so no percentage
    is reported for them ✓

CROSS-REPORT CONSISTENCY
    Total assets change      = 662,560 − 563,300 = 99,260
    Liabilities change       = 194,084 − 168,300 = 25,784
    Equity change            = 468,476 − 395,000 = 73,476
    25,784 + 73,476 = 99,260 ✓  (assets = liabilities + equity holds on the change)

    Retained earnings roll-forward:
      95,000 + FY2025 profit 73,476 = 168,476 ✓

    Balance sheet equation:
      31-Dec-2024: 563,300 = 168,300 + 395,000 ✓
      31-Dec-2025: 662,560 = 194,084 + 468,476 ✓

DOUBLE-ENTRY VERIFICATION
    Every P&L entry has a corresponding balance sheet entry:
      Sales Revenue: Cr 486,500 ↔ Dr Accounts Receivable 486,500 ✓
      COGS: Dr 291,900 ↔ Cr Inventory 291,900 ✓
      Rent: Dr 48,650 ↔ Cr Cash at Bank 48,650 ✓
      Salaries: Dr 97,300 ↔ Cr Cash at Bank 97,300 ✓
      Purchases: Dr Inventory 437,900 ↔ Cr Accounts Payable 437,900 ✓

The final check is the one that matters most: the change in assets equals the change in liabilities plus the change in equity, and the movement in retained earnings equals the profit for the period. If either fails, the underlying transactions are incomplete and every ratio built on them will be misleading.

7. Common Issues and Solutions

Symptom Cause Resolution
The percentage column is completely empty The base amount for that period is zero — usually a period with no income at all, or a balance sheet date before the business began trading Check that the period contains transactions and that the correct Income group (or Assets total) exists in the chart of accounts
Percentages do not add to 100% Each line is rounded independently to two decimal places, so the rounded parts may differ from the rounded total by a fraction This is expected. Always read the total line, which is calculated from the underlying amounts rather than from the rounded percentages
The trend percentage shows a dash The comparison (prior) period is zero, so no growth rate can be computed Use the change column instead, which is still meaningful
A line is missing from the report The account is inactive with a zero balance, or Exclude Zero Balances is on and the balance is zero in every column Turn off Exclude Zero Balances, or reactivate the account
Percentages look wrong but the amounts are right The base group is not the one you expect — for example the income statement has no group named Income, so the first non-expense group is used instead Confirm the chart of accounts contains an Income group holding your revenue accounts, and place any other revenue inside it
Liabilities show as negative amounts The layout presents liabilities and equity as a deduction beneath total assets Choose the "Assets = Liabilities + Equity" layout, which presents them as a positive total, or read the individual liability lines, which are always positive
Two comparison columns show the same figures Both periods have the same dates, or the same period was entered twice Check the From Date and To Date of each comparison row; the two periods must be different
Division figures do not match the business total Transactions posted without a division are excluded from a division report Review the reporting division on the unclassified journal entries
Totals changed after rounding was switched on Whole-number rounding rounds the printed amount only; the totals are still derived from the underlying amounts No action required. Rounding affects presentation only
The figures differ from the standard statement report Different accounting basis, a different date, or a division filter is applied Compare the period dates and the accounting method shown in the subtitle of both reports

8. Accounting Regulation Compliance

Common size and trend analysis are analytical schedules. They do not replace the primary financial statements, and nothing in them changes what must be recognised or measured. They are, however, a recognised means of presenting the comparative information that the primary statements are required to carry, and the following table sets out how each report supports the applicable requirements.

8.1 IAS 1 — Presentation of Financial Statements

Requirement Reference How This System Complies
Comparative information for the previous period §38 Both report families present the prior period alongside the current period. Trend Analysis presents it as a dedicated comparison column with the movement quantified
Material items presented separately §97 Each account is a separate line, and group headings can be collapsed to summarise without losing the underlying detail
Consistent classification between periods §31 Line classification comes from the chart of accounts, so a comparison between periods uses the same presentation in both. A change in classification is a change to the chart of accounts, not to the report
Accrual basis of accounting §27 Accrual Basis is the default accounting method. Cash Basis is available for management review and is clearly labelled on the report
Financial statements presented on a consistent basis §10(b), §38 Saved reports store the basis, the periods and the layout, so a report can be re-run and reproduced without re-keying the parameters

8.2 IAS 8 — Accounting Policies and Estimates

Requirement Reference Compliance
Accounting policies applied consistently between periods §31 Both reports read from the same general ledger and the same chart of accounts, so any change of policy becomes visible as a movement in the trend columns rather than being absorbed silently
Changes in estimates recognised prospectively §36 Depreciation, amortisation and inventory costing estimates apply prospectively and therefore appear only in the periods in which they are recognised
Comparatives not restated for a change in policy §39 The comparison column always shows the figures as they were reported for that period, so the effect of a policy change is visible as a difference in the trend columns

8.3 IAS 21 — Foreign Exchange

Requirement Reference Compliance
Monetary items revalued at the closing rate §23 Foreign currency balances are revalued at the period end date before the amounts are totalled, so both statements are stated at the closing rate
Exchange differences recognised in profit or loss §28 The revaluation difference is recognised in the currency gains and losses account and therefore appears in the income statement, the common size percentages and the trend movement

8.4 IAS 34 — Interim Financial Reporting

Requirement Reference Compliance
Same accounting policies as the annual financial statements §26 Interim periods use the same ledger, the same chart of accounts and the same basis as the annual periods, so the two are directly comparable
Comparative information for the corresponding interim period §21 A trend comparison of two interim periods of equal length produces a like-for-like movement; use matching period lengths when comparing quarters

8.5 Revenue and Expense Analytical Support

Standard Requirement Reference How This System Complies
IFRS 15 Revenue recognised when the performance obligation is satisfied §35 Revenue is recognised on invoice date in the accrual basis, and the trend analysis measures the growth in that recognised revenue against the prior period
IAS 2 Cost of inventories recognised as an expense when sold §34 Cost of goods sold is derived from inventory layers and appears as a percentage of income, so the gross margin can be monitored directly against the prior period
IAS 16 Depreciation recognised as an expense §48 Depreciation appears as an operating expense line, and its share of income is visible in the common size analysis
IAS 38 Amortisation recognised as an expense §97 Amortisation appears as an operating expense line with the same treatment
IFRS 9 Fair value changes recognised in profit or loss §5.7.1 Unrealised and realised investment gains and losses are recognised in profit or loss and are therefore included in every analysis of income

8.6 Analytical Review and Governance

Practice Description
Ratio governance The percentages produced by these reports are derived from the primary statements and carry no separate audit trail of their own. They are valid only to the extent the underlying ledger is complete and balanced. Always complete the trial balance verification in section 6.4 before circulating a ratio-based analysis.
Comparative consistency Where a prior period figure has been restated, the restated figure is what the comparison column will show, because the comparison always reflects the ledger as it stands for that period. Restatements should therefore be recorded in the ledger and disclosed, not applied only in the analysis.
Basis of preparation The accounting basis and the periods covered are stated on the face of every report, so any analysis circulated for review can be traced to the basis on which it was prepared.
Local requirements For a business reporting under the Bangladesh Accounting Standards and the listing regulations of the Bangladesh Securities and Exchange Commission, the primary statements remain the compliant document. These analyses support the management discussion and the equity analysis required for a prospectus or a rights issue, and the same requirement for current and comparative information applies.

End of Common Size and Trend Analysis Guide

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