Definition of Common Size Income Statement



A common sized income statement is a percentage format income statement. The percentage is calculated for each line item of an income statement taking sales revenue as a base. The purpose of the common-sized income statement is to assess the percentage change in each item of the income statement. This can also be used to perform vertical analysis of each year and also for comparison between two years. For example, consider the following common sized income statement for year 2019 and 2020.

 


 

2019

Common Sized

2020

Common Sized

Sales Revenue

500,000

100.00%

580,000

100.00%

    Less: Sales return

-10,000

-2.00%

-12,500

-2.16%

    Less: Trade discount

-32,000

-6.40%

-37,000

-6.38%

Net Sales

458,000

91.60%

530,500

91.47%

   Less: Cost of Goods sold

-310,000

-62.00%

-326,000

-56.21%

Gross Profit

148,000

29.60%

204,500

35.26%

   Less: Operating expenses:

 

 

 

 

   Selling and administrative

-35,000

-7.00%

-52,000

-8.97%

   Depreciation

-13,000

-2.60%

-23,000

-3.97%

   Amortization

-21,000

-4.20%

-19,000

-3.28%

Profit before interest and taxes

79,000

15.80%

110,500

19.05%

   Less: The interest cost

-22,000

-4.40%

-69,000

-11.90%

Profit before tax

57,000

11.40%

41,500

7.16%

   Less: Taxes

-18,000

-3.60%

-26,000

-4.48%

Profit after tax

39,000

7.80%

15,500

2.67%

 

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