Common-Size Turns Raw Statements Into Structure
Use common-size analysis to compare financial structure across time and peers.
Raw dollars tell you size. Percentages tell you shape. Use a base that matches the question For an income statement, revenue is usually the base because you want to see how each cost consumes sales. For a balance sheet, total assets or total capitalization often becomes the base because you want to see how resources and funding are structured. Compare trend and peers Common-size analysis is powerful in two directions. Across time, it shows whether the same company is becoming more or less efficient. Across peers, it shows whether different-sized companies have similar cost structures, asset intensity, or financing choices.…
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