And chief financial officers often study these reports in order to determine a budget for an organization. In companies that are somewhat static in terms of revenue (such as companies that rely on dues from members, certain revenue from contracts, etc.), past finances are an excellent indication of how much the company will take in and spend in the future. Post your comments Post Anonymously Please enter the code:
The first step to complete a comparative balance sheet analysis is to get organized. Locate the company's balance sheet data and arrange it in a table such that each account is shown side by side over time. Make sure the data is in regular time intervals for consistency. In its most basic form, this could be as simple as two quarterly snapshots, side by side. In other cases, it may be more informative to compare more snapshots over time. A farming company with distinct seasonal activities, for example, may require that you review 12 consecutive monthly balance sheets in order to understand how its seasonality impacts the balance sheet's inventory, accounts receivable, and accounts payable.