To perform a comparative balance sheet and trend analysis for a manufacturing company, follow these steps:

1. Gather the balance sheets: Collect the balance sheets for multiple periods, typically for at least two to three years. Ensure you have the balance sheet data for the same date or period to facilitate comparison.
2. Format the data: Create a spreadsheet in Excel or any other spreadsheet software and organize the balance sheet data. Create columns for each period and rows for each line item of the balance sheet, such as assets, liabilities, and equity.
3. Calculate changes: Calculate the dollar and percentage changes for each line item between the periods. This can be done by subtracting the value of the previous period from the current period. Use formulas in Excel to automate this calculation.
4. Perform trend analysis: Analyze the changes in each line item over time. Look for significant increases or decreases in values and identify the key trends. For example, you may observe increasing property, plant, and equipment (PPE) values due to investments in manufacturing facilities.
5. Identify key ratios: Calculate relevant financial ratios using the balance sheet data to assess the company’s liquidity, solvency, and efficiency. Common ratios for manufacturing companies include the current ratio, debt-to-equity ratio, and asset turnover ratio.
6. Analyze ratios: Compare the calculated ratios across the periods to identify any significant changes or trends. Assess whether the company’s liquidity, leverage, and efficiency have improved or deteriorated over time. Consider the industry norms or benchmarks for better context.
7. Interpret the trends: Analyze the trends observed in the comparative balance sheet and ratio analysis. Identify the key factors driving the changes and their implications for the company’s financial performance. For example, a decreasing debt-to-equity ratio may indicate improved financial stability.
8. Make strategic recommendations: Based on the analysis, draw conclusions about the manufacturing company’s financial health and performance. Identify the company’s strengths and weaknesses, and make strategic recommendations to leverage strengths and address weaknesses. For instance, if inventory turnover is decreasing, recommend implementing better inventory management practices.
9. Prepare a report: Summarize the comparative balance sheet analysis, trend analysis, and key findings in a report or presentation format. Clearly present the data, trends, and insights to effectively communicate the analysis to stakeholders, such as management, investors, or lenders.

By conducting a comparative balance sheet and trend analysis for a manufacturing company, you can gain valuable insights into its financial performance, stability, and efficiency. This analysis helps identify areas of improvement, potential risks, and opportunities for strategic decision-making in areas such as asset allocation, working capital management, and debt structure.