Module 7 : Interpretation and Analysis of Accounts
Lecture 1 : Vertical & Horizontal Analysis
 

Common-size Statements

  • On the income statement, each item is expressed as a percentage of net sales. 
  • On the balance sheet, the common size is  the total on each side of the accounting equation.
  • Common-size statements are used to compare one company to other companies, and to the industry average.
  • They are also used to compare financials with earlier years.