Preparation of common size statement: Mathematical Solution - QS Study
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Common size statement is one in which all the items are expressed as a percentage of a base item. Common size statements are helpful in discovering efficiencies and inefficiencies of the management by comparing:

  • the statements of an individual business for two or more different periods,
  • the statements of two or more different companies in an industry,
  • the statements of an individual business with the industry’s average.

 

Example:

An example of comparative common size income statement of two companies is given below:

x

An example of comparative common size balance sheet of two companies is given below:

y