Common Size Financial Statement

AAA

DEFINITION of 'Common Size Financial Statement'

A company financial statement that displays all items as percentages of a common base figure. This type of financial statement allows for easy analysis between companies or between time periods of a company.

INVESTOPEDIA EXPLAINS 'Common Size Financial Statement'

The values on the common size statement are expressed as percentages of a statement component such as revenue. While most firms don't report their statements in common size, it is beneficial to compute if you want to analyze two or more companies of differing size against each other.

Formatting financial statements in this way reduces the bias that can occur when analyzing companies of differing sizes. It also allows for the analysis of a company over various time periods, revealing, for example, what percentage of sales is cost of goods sold and how that value has changed over time.

RELATED TERMS
  1. Common Size Balance Sheet

    A balance sheet that displays both the numeric value of all entries, ...
  2. Common Size Income Statement

    An income statement in which each account is expressed as a percentage ...
  3. Handelsgesetzbuch - HGB

    A law that governs the primary commercial code for companies ...
  4. Accounting

    The systematic and comprehensive recording of financial transactions ...
  5. Balance Sheet

    A financial statement that summarizes a company's assets, liabilities ...
  6. Generally Accepted Accounting Principles ...

    The common set of accounting principles, standards and procedures ...
Related Articles
  1. Reading The Balance Sheet
    Investing Basics

    Reading The Balance Sheet

  2. Understanding The Income Statement
    Forex Education

    Understanding The Income Statement

  3. What Is A Cash Flow Statement?
    Markets

    What Is A Cash Flow Statement?

  4. Advanced Financial Statement Analysis
    Options & Futures

    Advanced Financial Statement Analysis

comments powered by Disqus
Hot Definitions
  1. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  2. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  3. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  4. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  5. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  6. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
Trading Center