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17.3 Prepare Common-Size Financial Statements

Common-Size Statements​

Common-Size Statements:

  • Express items as percentages
  • Income statement: % of revenue
  • Balance sheet: % of total assets
  • Allow comparison regardless of size

Income Statement Format​

                    Amount      % of Revenue
Revenue          €100,000         100.0%
Cost of Goods Sold  60,000          60.0%
Gross Profit         40,000          40.0%
Expenses             30,000          30.0%
Net Income       € 10,000          10.0%

Balance Sheet Format​

                    Amount      % of Assets
Assets            €200,000         100.0%
  Current Assets    80,000          40.0%
  Fixed Assets     120,000          60.0%
Liabilities        100,000          50.0%
Equity             100,000          50.0%

Luxembourg Compliance Note​

Common-size statements in Luxembourg:

  • Useful for comparison
  • Help identify structure
  • Support analysis
  • Useful for benchmarking

Think It Through​

Why are common-size statements useful? How do they help compare companies of different sizes?