Accountancy · Ch 8 — Financial Statement Analysis
Common-Size Statements
Common-Size Statements
Common-Size Statement
A statement in which every item is expressed as a percentage of a chosen common base figure — Revenue from Operations for the Statement of Profit and Loss, and Total Assets (or Total Equity and Liabilities) for the Balance Sheet — so that the internal structure of the statement can be compared across years or between firms of very different sizes.
Unlike a comparative statement, which highlights the change between periods, a common-size statement highlights the internal proportions within a single period, making it especially useful for comparing a small company against a much larger one, since both are reduced to the same percentage scale.
Worked illustration (same data as Section 3's comparative statement, now expressed as a percentage of Revenue from Operations for each year separately).
Common-Size Statement of Profit and Loss
| Particulars | 2023 (₹) | % of Revenue (2023) | 2024 (₹) | % of Revenue (2024) |
|---|---|---|---|---|
| Revenue from Operations | 10,00,000 | 100.00% | 12,00,000 | 100.00% |
| Less: Cost of Materials Consumed | 6,00,000 | 60.00% | 6,60,000 | 55.00% |
| Less: Other Expenses | 1,00,000 | 10.00% | 1,20,000 | 10.00% |
| Total Expenses | 7,00,000 | 70.00% | 7,80,000 | 65.00% |
| Profit before Tax | 3,00,000 | 30.00% | 4,20,000 | 35.00% |
A financial statement in which every item is expressed as a percentage of a common base (Revenue from Operations for the P&L; Total Assets/Equity and Liabilities for the Balance Sheet), enabling comparison of internal …