Meaning

Common Size Income Statement is a statement in which the figure of net sales is assumed to be equal to 100 and all other figures of ‘Profit and Loss Account are expressed as percentage of Net Sales so as to  draw conclusion regarding the behavior of expenses over period of time.

Format of Common Size Income Statement

Common Size Income Statement of ….Ltd. for the year ending….31st, March 20….and 31st,March 20….

Particulars Note No. Previous Year(`) Current Year(`) Percentage of Net Sales Previous Year Percentage of Net Sales Current Year
1.Revenue from Operations  100 100
2. Other Income
3.Total revenue (1+2)

4. Expenses

Cost of Materials Consumed

Purchases of Stock-in-Trade

Changes in inventories of Finished Goods

Work-in-Progress and Stock-in-Trade

Employees Benefits Expenses

Finance Costs

Depreciation and Amortization Expenses

Other Expenses

Total Expenses

Profit before Tax(3 – 4)

How to prepare Common Size Income Statement

The main steps in preparing the Common Size Income Statement are:

1. Enter the items of Income Statement in first column.

2. Enter the absolute amounts of previous year items in the second column.

3. Enter the absolute amount of current year items in third column.

4. Enter the common size percentages of previous year in fourth column.

5. Enter the common size percentages of current year in fifth column.

Formula for calculating the common size percentage :

[Item figure/Net Sales] x100

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