Common Size Income Statement

If you're a CEO, you might not have time to read complete income statements. You’re too busy sitting in the dark, plotting the takeover of the world. But since you need to know how your company is performing, some poor slob accountant gives you a common size income statement.

This is like a cheat sheet for a company’s income numbers. This type of income statement categorizes each line item as a percentage of a firm’s net sales. It's a simple form of financial analysis, because it allows people to analyze changes in these figures from quarter to quarter or year over year.