A comparative balance sheet is used to compare the assets, shares, and liabilities of an entity. In this sheet, all the details of the entity are written side by side in order to make a clear visual comparison. Many companies make the comparative sheet at the end of every month. This sheet is useful for creating the balance sheet in order to report the entire financial year of the company.
A comparative balance sheet keeps records of the assets, liabilities, shareholders of an entity. A balance sheet can represent the financial statement at the end of the year. It keeps the record of business finances for the past three years. It can also represent the balance sheet at the end of each month which holds the records of the finances of the last 12 months.
In other words, we can say that the main purpose of the comparative balance sheet is to represent the financial condition of the company over time to the customer. This is very useful in order to develop the trend line analyses.
The main purpose of using this comparative balance sheet is to reveal the number of assets that the companies have gained in the previous year. It also tells about the assets of the companies where it has made a big investment.
The balance sheet is also used to make a comparison between the comparing sheet of the current month and that of previous months. The investor can see the financial position of the company over a particular period of time. Although the financial statements can also be used to conduct the trend line analyses, the comparison balance sheet does the best job.
Privately held companies are not required to use the comparative balance sheet. The sheet is not required to be held by the private companies or by the nonprofit organizations but it is needed by the SEC for the reports which are generated by public companies in various circumstances.
The basic objective of using the comparative balance sheet is to determine the differences between two or more similar quantities. The main objective is to determine the financial health of the company. The investor can determine if the company has expanded its assets over a specific period of time. The recent investment of the company made in any field can also be evaluated through the use of the comparative balance sheet.
Most of the companies hire a professional person for creating and using a comparative balance sheet. However, you can also do it yourself by downloading a readymade and downloadable comparative balance sheet template. The template is very easy to use and customize which makes it highly usable and effective.
The template is very useful for businesses, organizations, and companies. A company is just needed to change the name of it and some other records. It can be integrated easily into any company. It is very commonly used these days.
The comparative balance sheet is usually prepared in MS Excel file. There are a series of rows and columns in this sheet. Each column can be used to enter one factor to be compared. If you want to compare 4 factors, 4 columns can be drawn in the comparative sheet.
File: (.xlsx) FREE Download
Size 21 Kb