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.
