COMMON SIZE ANALYSIS Definition

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COMMON SIZE ANALYSIS, as used in vertical analysis of financial statements, an item is used as a base value and all other accounts in the financial statement are compared to this base value. On the balance sheet, total assets equal 100% and each asset is stated as a percentage of total assets. Similarly, total liabilities and stockholders equity are assigned 100%, with a given liability or equity account stated as a percentage of total liabilities and stockholders equity. On the income statement, 100% is assigned to net sales, with all revenue and expense accounts then related to it in percentages. See COMMON SIZED PERCENTAGES.

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PRO-FORMA FINANCIAL STATEMENT is a financial statement projection that shows how an actual financial statement will look if certain specified assumptions are realized.

ARTICULATION, in business, is the shape or manner in which things come together and a connection is made. In the spoken word, it is expressing in coherent verbal form.

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