A common size income statement that shows each line account as a percentage of total sales or revenue. This financial analysis allows us to critically compare and measure the relative ratio of different expenses and income items within an income statement. This financial analysis tool helps as a benchmarking evaluation, particularly when comparing the financial performance of various firms or when evaluating a firm’s performance over time.
How to calculate common size income statement
As shown in the above image, your total revenue is $1,500,000 and your cost of goods sold is $875,000, you can calculate the COGS as a percentage of revenue as:
(COGS/ Total Revenue) * 100 = ($875,000 / $1,500,000) * 100 = 58%