common-size financial statement definition

common-size financial statement

Format for balance sheet and income statement (profit and loss account) in which each financial item is expressed also as a percentage of the total amount (or a common base amount) for easier comparison. For example, total sales amount is used as a common base in an income statement and every other item (cost of sales, gross profit, operating expenses, etc.) is shown both as a figure and as a percentage of total sales. This arrangement permits vertical analysis of the financial data. See also comparative financial statement.

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