Format of Common Size Balance Sheet
Note: The Common-size Balance Sheet does not include line items of the Balance Sheet, the accounting treatment of which are not to be evaluated.
Common Size Balance Sheet: Meaning, Objectives, Format & Example
A Vertical Analysis of Financial Statements of a company, in which the amount of individual items of a Balance Sheet of Statement of Profit & Loss are written, is known as a Common Size Financial Statement. The amounts written are then converted into percentage by taking a common base; which is, Revenue from Operations or Net Sales in case of Statement of Profit & Loss and Total Assets or Total Equity and Liabilities in case of a Balance Sheet. The percentages calculated by taking the respective common bases are then compared with the corresponding percentages of other periods, through which meaningful conclusions can be drawn. A Common-size Statement can be prepared for inter-firm and intra-firm comparisons or a Balance Sheet and Income Statement.
Common-size Statements are accounting statements expressed in percentage of some base rather than rupees.
– Kohler
Table of Content
- What is a Common Size Balance Sheet?
- Objectives of Common Size Balance Sheet
- Preparation of Common Size Balance Sheet
- Format of Common Size Balance Sheet
- Example of Common Size Balance Sheet