Income Statement – Prior Period Comparisons and Analysis

An income statement can be a very useful tool when the current period being reported is shown along with the same period for the prior year. These are called comparative income statements. By doing this, you can see how the dollar amount of revenues and expenses compare from year to year.

There are two additional analyses that I like to perform when comparing the results of two periods. The first is to calculate the dollar amount of change from period to period. I do this by subtracting the current period results for an account from the prior period’s results.

After I do this, I calculate the percentage change. This is calculated by dividing the dollar change amount from the first period’s results for that account. Reviewing both the dollar and percentage changes give me a better feel for the actual performance.