Common-Size Financial Statements
Gain Insights from Your Industry and Competitors
Common-size analysis is a powerful tool for financial analysis and decision-making. It's useful for comparing the financial performance and position of different companies, especially those of different sizes. You can identify the strengths and weaknesses of your company compared to your industry and competitors. It also helps to identify trends and patterns over time within a company and across entities.
In this video, you'll learn:
- How to build common-size financial statements for the income statement, balance sheet, and statement of cash flows
- Key ratios that are calculated in common-size financial statements
- Common base numbers used in common-size analysis
- How to break down the components of return on equity (ROE) or return on assets (ROA)