Trend analysis refers to the study of movement of figures over a period. The trend may be increasing trend or decreasing trend or irregular. When data for more than two years are to be analysed, it may be difficult to use comparative statement.

Working capital statement or schedule of changes in working is prepared to disclose net change in working capitals on two specific dates (generally two balance sheet dates). It is prepared from current assets and current liabilities
Working Capital = current Assets - Current Liabilities.

Following are the commonly used tools of financial statement analysis
(i) Comparative statement
(ii) Common-size statement
(iii) Trend analysis
(iv) Funds flow analysis
(v) Cash flow analysis

Financial statements are the statements prepared by the business concern at the end of the accounting period to ascertain the operating results and the financial position. The basic financial statements prepared by business concerns are income statement and balance sheet.

Trend analysis for kala ltd

Particulars	Rs. in thousands			Trends percentage
	2015-16	2016-17	2017-18	2015-16	2016-17	2017-18
Revenue from operations	400	500	600	100	125	150
Add: Other income	100	150	200	100	150	200
Total revenue	500	650	800	100	130	160
Less: Expenses	200	290	350	100	145	175
Profit aftertax	300	360	450	100	120	150

Note: 2016 - 17.
Percentage for Revenue from operations = \(\frac{500}{400}\) x 100 = 125%
Percentage of other income = \(\frac{150}{100}\) x 100 = 150%
Percentage of total revenue = \(\frac{650}{500}\) x 100 = 130%
Percentage for expenses = \(\frac{290}{500}\) x 100 = 145%
Percentage for profit before tax = \(\frac{360}{300}\) x 100 = 120%
In 2017 -18.
Percentage for revenue from operations = \(\frac{600}{400}\) x 100 = 150%
Percentage for other income = \(\frac{200}{100}\) x 100 = 200%
Percentage of total revenue = \(\frac{800}{500}\) x 100 = 160%
Percentage for expenses = \(\frac{350}{200}\) x 100 = 175%
Percentage for profit before tax = \(\frac{450}{300}\) x 100 = 150%

Common size income statement for the year ended 31st March, 2019 31st March, 2017

Particulars	Maria Ltd		Kala Ltd
	Absolute amount	Percentage of revenue from operations	Absolute amount	Percentage of revenue from operations
	Rs.	Rs.	Rs.
Revenue from Operations	1,00,000	100	2,00,000	100
Add: Other income	10,000	10	30,000	15
	1,10,000	110	2,30,000	115
Less: Expenses	70,000	70	1,20,000	60
Profit before tax	40,000	40	1,10,000	55

Note: In Maria Ltd:
Computation of percentage for other income = \(\frac{10,000}{1,00,000}\) x 100 = 10%
Percentage for Expenses = \(\frac{70,000}{1,00,000}\) x 100 = 70%
Percentage for before tax = \(\frac{40,000}{1,00,000}\) x 100 = 40%
In Kala Ltd:
Percentage for other income \(\frac{30,000}{2,00,000}\) x 100 = 15%
Percentage for Expenses = \(\frac{1,20,000}{2,00,000}\) x 100 = 60%
Percentage for profit before tax = \(\frac{1,10,000}{2,00,000}\) x 100 = 55%

Common-size income statement of Raja Ltd for the year ended 31^st March, 2017

Particulars	Absolute amount Rs.	Percentage of revenue from operations
Revenue from Operations	4,50,000	100
Add: Other income	67,500	15
Total revenue	5,17,500	115
Less: Expenses	1,35,000	30
Profit before tax	3,82,500	85

Note:
Computation of percentage for other income = \(\frac{67,500}{4,50,00}\times\) = 15
Percentage for Total revenue = \(\frac{5,17,500}{4,50,000}\times100\) = 115%
Percentage for Expenses = \(\frac{1,35,000}{4,50,000}\times\)100 = 30%
Percentage for Profit before tax = \(\frac{3,82,500}{4,50,000}\) x 100 = 85%

Comparative income statement of Daniel Ltd for the year ended 2016 and 2017

Particulars	2015-16 Rs.	2016-17 Rs.	Absolute amount of increase (+) or decrease (-) Rs.	Percentage increase (+) or decrease (-)
Revenue from Operations	40,000	50,000	+ 10,000	+ 25
Less: Operating expenses	25,000	27,500	+ 2,500	+ 10
Profit before tax	15,000	22,500	+ 7,500	+ 50
Less: Income tax	4,500	6750	+ 2,250	+ 50
Profit after tax	10,500	15,750	+ 5,250	+ 50

Note:
Percentage increase for revenue from operations = \(\frac{10,000}{40,000}\) x 100 = 25%
Percentage increase for operating expenses = \(\frac{2,500}{25,000}\) x 100 = 10%
Percentage increase for profit before tax = \(\frac{7,500}{15,000}\) x 100 = 50%
Percentage increase for income for Income tax = \(\frac{2250}{4500}\) x 100 = 50%
Percentage increase for profit after tax = \(\frac{5250}{10,500}\) x 100 = 50%

Comparative income statement of Arul Ltd for the years ended 31^st March 2016 and 31^st March 2017

Particulars	2015-16	2016-17	Absolute amount of increase (+) or decrease (-)	Percentage increase (+) or decrease (-)
Revenue from Operations	50,000	60,000	+10,000	+20
Add: Other income	10,000	30,000	+20,000	+200
Total revenue	60,000	90,000	+30,000	+50
Less: Expenses	40,000	50,000	+10,000	+25
Profit before tax	20,000	40,000	+20,000	100

Note:
Computation of percentage increase for revenue form operations =  \(\frac{10,000}{50,000}\times100\) = 20%
Percentage increase for other incomes = \(\frac{20,000}{10,000}\times100\) = 200%
Percentage increase for expenses = \(\frac{10,000}{40,000}\times100\) = 25%

Common-size income statement of Kumar Ltd for the year ended 31^st March, 2018

Particulars	Absolute amount	Percentage of revenue from operations
Revenue from operations	5,00,000	100
Add: Other income	20,000	4
Total revenue	5,20,000	104
Less: Expenses	3,00,000	60
Profit before tax	2,20,000	44

Computation of percentage for other income
\(\cfrac { 20,000 }{ 5,00,000 } \times 100=4%\)%

Comparative income statement of Tharun Co. Ltd for the years ended 31^st March, 2017 and 31^st March, 2018

Particulars	2016-17	2017-18	Absolute amount of increase ( +) or decrease (–)	Percentage increase (+) or decrease (–)
	Rs.	Rs.	Rs.
Revenue from operations	2,00,000	2,50,000	+50,000	+25
Add: Other income	50,000	40,000	–10,000	–20
Total revenue	2,50,000	2,90,000	+40,000	+16
Less: Expenses	1,50,000	1,20,000	–30,000	–20
Profit before tax	1,00,000	1,70,000	+70,000	+70

Computation of percentage increase for revenue from operations
\(\cfrac { Absolute\ amount\ of\ increase\ or\ decrease }{ Year\ 1\ amount } \times 100=\cfrac { 50,000 }{ 2,00,000 } \times 100=25%\)