Building and Using Common-Size Financial Statements
Common-size analysis is a powerful tool for financial analysis and decision-making. Common-size analysis is a form of ratio or metric analysis that states financial statement amounts as percentages of a base amount.
Common-size analysis is useful for comparing the financial performance and position of different companies, especially those of different sizes. It also helps to identify trends and patterns over time within a company and across entities. This is very useful for business environmental analysis, peer benchmarking, and building financial projections.
You may already do some forms of common-size analysis but aren't aware of all the possibilities of it.
You'll learn:
You'll see examples of analysis and methods I've used in my career, as well as ideas on other ways you may be able to use common-size analysis.Â
Founder of CFO Perspective
Rob Stephens is the Founder of CFO Perspective, which provides continuing education courses for CPAs and financial management courses for business advisors and staff. He has been quoted in Forbes, U.S. News and World Report, Bloomberg Businessweek, and many other news sources. He is also the author of Key Performance Indicators and KPI Dashboards. Rob has a 30-year career that includes serving as a CFO, Director of Operations, and SVP of Finance. Rob is an adjunct instructor for the MBA program at Gonzaga University. Rob holds a Masters of Science in Personal Financial Planning and a Graduate Certificate in Financial Therapy from Kansas State University. He received a B.A. in Business Administration from the University of Washington.
