A financial statement that is prepared for the sole purpose of comparing financial results of a current period with those of prior period(s). A comparative statement is used to identity a trend or pattern of change over two financial periods or more. To that end, prior period financials are presented alongside the latest financials in columnar format, that is, side-by-side in separate columns, each designating a financial year.
Other reasons for preparation of comparative financial statement include tracking an entity’s progress and performance, period to period, and over time, and measuring it against that of other players in the same industry. Comparison may involve aspects such as profitability, financial position, etc.
Comparative financial statements may be a complete set of financial statements that an entity prepares, either for a full financial year or interim periods.
