Common-size statement
Also called: common size analysis, vertical analysis
A financial statement with each line shown as a percentage of a base, such as revenue for the income statement or total assets for the balance sheet.
Common-size statements make trends across years, and comparisons between companies of different sizes, easier to see. A cost line rising as a share of revenue, for example, shows margin pressure that rupee figures can hide while sales grow.
Example
If costs of materials are ₹600 crore on revenue of ₹1,000 crore, they appear as 60% in a common-size income statement.
Learn more in these lessons
- Analysing financial statements in practiceHow do you turn several years of annual reports into real understanding?
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