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benefits of preparing and using a common size balance sheet and/or income statement

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What are the benefits of preparing and using a common size balance sheet and/or income statement? Why would you use this in your analysis? What are the pros and cons of using this instead of ratios?

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Benefits of preparing and using a common size balance sheet and/or income statement are expressed in this solution.

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Common size balance sheets & income statements are standardized financial statements presenting all items in percentage terms. Balance sheet items are presented as a percentage of assets and income statement items are presented as a percentage of sales. In this form, financial statements are relatively easy to read and compare. For example in performing a ...

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Manal Elkhoshkhany, MBA
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  • BA, Ain Shams University, Cairo Egypt
  • MBA, California State University, Sacramento
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