Microsoft Office Tutorials and References
In Depth Information
Common size financial statements
Comparing financial statements from different companies can be difficult. One such difficulty is comparing
companies of different sizes. A small retailer might show $1 million in revenue, but a multinational retailer
might show $1 billion. The sheer scale of the numbers makes it difficult to compare the health and results of op-
erations of these very different companies.
Common size financial statements summarize accounts relative to a single number. For balance sheets, all
entries are shown relative to total assets. For the income statement, all entries are shown relative to total sales.
Figure 13-12 shows a common size income statement.
Figure 13-12: Entries on a common size income statement are shown relative to revenue.
The formula in cell C4 is
The denominator is absolute with respect to both rows and columns so that when this formula is copied to other
areas of the income statement, it shows the percentage of revenue. To display only the percentage figures, you
can hide column B.