Common-sized Statements definitions Flashcards
Common-sized Statements definitions
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Common Size Statement Financial report presenting each line item as a percentage of a base figure, enabling easy comparison across companies. Vertical Analysis Analytical method expressing each financial statement item as a percentage of a base amount within the same period. Income Statement Financial document summarizing revenues and expenses, typically using net sales as the base for percentage calculations. Balance Sheet Statement showing assets, liabilities, and equity, where items are often expressed as a percentage of total assets or total liabilities and equity. Net Sales Revenue figure used as the base amount for calculating percentages in common size income statements. Total Assets Sum of all resources owned by a company, often serving as the base for common size balance sheet analysis. Total Liabilities and Equity Combined value of obligations and owners’ claims, equaling total assets and used as a base in balance sheet analysis. Cost of Goods Sold Expense representing the direct costs of producing goods, often shown as a percentage of net sales. Gross Profit Difference between net sales and cost of goods sold, expressed as a percentage to assess profitability. Operating Expenses Costs incurred in running daily business operations, typically shown as a percentage of net sales. Income from Operations Earnings remaining after operating expenses, often presented as a percentage of net sales. Net Income Final profit after all expenses and taxes, commonly expressed as a percentage of net sales in common size statements. Base Amount Reference figure, such as net sales or total assets, used to calculate percentages for each line item. Percentage Basis Method of expressing financial data as proportions of a base amount, facilitating comparison across entities.
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