FSA Notes3

Study Material & Notes for the Chapter 11

Financial Statements Analysis & Tools

III.  COMMON SIZE STATEMENTS

i.  Common Size Statements
  • Common-size statement means a statement which expresses all items of a financial statement as a percentage of some common base.
  • It ascertains the relative importance of different components of the financial statement.
ii. Common Size Balance Sheet
  • Common-size balance sheet means a Balance sheet in which figures reported in Balance sheet are converted into percentages to total assets or total of equity and liabilities.
  • In the Balance sheet, Total of assets or Total of equity & liabilities is taken as 100 and all other figures are expressed as a percentage of the total assets or total equity & liabilities.
iii. Common Size Statement of Profit & Loss
  • Common-size statement of profit and loss means an Income statement in which figures reported in the Statement of profit & loss are converted into percentages to Revenue from Operations.
  • In Statement of profit and loss, sales may be assumed to be equal to 100 and all other figures are expressed as a percentage of the Sales/Revenue from Operations.
FSA_3.1

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