A comparative balance sheet is used by business owners, investors, and analysts to assess a business's performance over multiple years. It presents the changes in assets, liabilities, and capital in a single format, helping make strategic decisions. It is also referred to as a comparative analysis and compares the current period's balance sheet with the previous period's.
Now, let us see the objectives of a comparative balance sheet:
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Making data presentable and insightful
The purpose of preparing the comparative balance sheet is to help with data processing and derive valuable insights from the data.
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Indicating the trend
Comparative financial statements are also used to indicate the change in trends of a company by comparing two statements, such as revenue and expenses, year after year.