A comparative balance sheet analysis is a method of analysing a company’s balance sheet over time to identify changes and trends arrange it in a table such that each account is shown side by side over time. Make data in regular time intervals for consistency. In its most basic form, this could be as simple as two quarterly, half yearly, yearly, and side by side. , it may be more informative to compare more over time.  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.

Compare how each account has changed over time. Did cash go up, down, or remain constant? What about inventory, accounts receivable, or accounts payable? Continue working down the balance sheet, noting how the different accounts interact and change together over time. For example, if the company shows an increase in real estate assets, do you see a corresponding increase in debt or equity capital?

More advanced techniques to compliment a comparative balance sheet analysis

To take your analysis to the next level, you can add additional techniques to make the comparative balance sheet analysis even more powerful. For example, you can show each of the balance sheet accounts as a percentage of the company’s total assets. By comparing how these numbers change over time, you can see not just how the balance sheet is changing, but also how its composition is shifting on a common-sized basis.

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