Question

While preparing Common Size Income Statement, each item of Income Statement is expressed as % of

1 point

Revenue from Operations

Other Income

Total Income

Profit Before Tax

​

Answer 1

Answer:

A common size income statement is an income statement in which each line item is expressed as a percentage of the value of revenue or sales. It is used for vertical analysis, in which each line item in a financial statement is represented as a percentage of a base figure within the statement.

Common size financial statements help to analyze and compare a company's performance over several periods with varying sales figures. The common size percentages can be subsequently compared to those of competitors to determine how the company is performing relative to the industry.