A common size income statement expresses each account as a percentage of net sales.A common size income statement for Company XYZ could look something like this: Normal Income Statement Common Size Income Statement 2013 2014 2013 2014 Net Sales $90,000 $100,000 100% 100% Cost of Goods Sold $63,000 $66,000 70% 66% Gross Profit $27,000 $34,000 30% 34% Taxes $15,000 $17,000 16.6% 17% Total Profit $12,000 $17,000 13.3% 17% While Company XYZ increased sales by 10 percent from 2013 to 2014, it managed to cut its cost of goods sold figure by 4 percent. Gross and total profits were up. Common size income statements are a simple tool that a business owner can use to compare her company’s finances to her competitors’, or compare her company to industry averages. It also enables her to gauge her financial progress by looking back at her company’s numbers from previous years. The common size statement facilitates comparisons of companies that are different sizes, as well. Investors can use common size income statements to analyze how its various components affect the company’s profits and financial position. It’s also a simple tool for business managers to use to analyze financial statements. Common size income statements are not as sophisticated as other forms of trend analysis, and they typically do not provide enough information to make informed investing decisions.