Common size financial statements

Why are common size financial statements used for financial analysis instead of the actual statements themselves?

Common size financial statements put all numbers in context, since the act of producing them involves calculating a ratio for each number on the statements. Without common sizing the statements, it is difficult to attach meaning to the numbers or to pick up trends.

Be the first to comment on "Common size financial statements"

Leave a comment

Your email address will not be published.


*


This site uses Akismet to reduce spam. Learn how your comment data is processed.