What is mean by common size comparative balance sheet?
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A common size balance sheet includes a column that notes the percentage of the total assets (for asset line items) or the percentage of total liabilities and shareholders' equity (for liability or shareholders' equity line items). This format is useful for comparing the proportions of assets, liabilities, and equity between different companies, particularly as part of an industry analysis or an acquisition analysis.
It is extremely useful to construct a common size balance sheet that itemizes the results as of the end of multiple time periods, in order to construct trend lines to ascertain changes over longer time periods.
It is extremely useful to construct a common size balance sheet that itemizes the results as of the end of multiple time periods, in order to construct trend lines to ascertain changes over longer time periods.
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