What is Common Size Income Statement?

What is Common Size Income Statement?

A statement that shows the percentage relation of each income/expense to the Revenue from Operations (Net Sales), is known as a Common-size Income Statement. To express the amounts as the percentage of the total, Revenue from Operations (Net Sales) is taken as 100. One may prepare a Common-size Statement of Profit & Loss (Income Statement) for different periods of the same firm or for the same period of different firms. With the help of the comparison between the Common-size Income Statements of different periods, one can understand the efficiency in earning revenues and incurring expenses....

What is Common-size Financial Statement?

A Vertical Analysis of the Financial Statements of a company, in which the amount of individual items of a Balance Sheet or 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 for Balance Sheet and Income Statement....

Objectives of Common Size Income Statement

Different objectives of a Common-size Income Statement are as follows:...

Preparation of Common Size Income Statement

A Common-size Income Statement has the following six columns:...

Format of Common-size Income Statement (Statement of Profit & Loss)

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Example of Common-size Income Statement

From the following Income Statement, prepare Common-size Income Statement:...

Common-size Income Statement – FAQs

Why use a common size income statement?...