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 Says:
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 Links:
Learn about the components of the statement of financial position and how they relate to each other. Reading The Balance Sheet
Learn how to use revenue and expenses, among other factors, to break down and analyze a company. Understanding The Income Statement
Learn how the CFS relates to the balance sheet and income statement as a part of a company's financial reports. What Is A Cash Flow Statement?
Learn what it means to do your homework on a company's performance and reporting practices before investing. Advanced Financial Statement Analysis
