Comparative and Common Size Statement

Last Updated On -15 Jul 2025

The Common Size Statement and the Comparative Statement are two of the most frequent ways to read financial accounts. When you look at financial accounts for accounting and finance, it's not enough to just read the numbers. You also have to understand what they indicate so you can make effective decisions. These tools let users observe how things change over time or between organizations, as well as how well their money is doing.

If you want to be financially educated, you need to know how to use these two tools, whether you're a student learning the basics or a professional comparing how well companies are doing.

What is a Comparative Statement?

A Comparative Statement is a financial report that shows the figures for two or more time periods side by side to show how they have changed over time. It lets you find out if sales, costs, and profits are going up, down, or keeping the same.

They show both percentage and absolute changes (in rupees or USD), which helps stakeholders make decisions:

How well sales are doing
Keeping costs low
Assets going up or down
Taking care of debts

When you use common size or comparative statements, be sure that the accounting techniques and formats are the same for all periods or companies. If you don't consistently recognize revenue, depreciate assets, or value inventory, your analysis could be wrong and you could come to the wrong conclusions.

Format of Comparative Income Statement

The format of Comparative income statement is tabulated below:

Particulars	2023 (₹)	2024 (₹)	Change (₹)	Change (%)
Sales revenue	10,00,000	12,00,000	2,00,000	20%
Cost of Goods	6,00,000	7,50,000	1,50,000	25%
Net Profit	2,00,000	2,10,000	10,000	5%

What is a Common Sized Statement?

A Common Size Statement is a type of financial statement that indicates how much each item is worth as a percentage of a basic number. This makes it easy to look into a company's finances and compare companies of different sizes.

A Common Size Income Statement shows each item as a percentage of net sales.
A Common Size Balance Sheet shows the value of each item as a proportion of either total assets or total liabilities.

The common sized statement method helps with:

Looking at financial accounts from top to bottom
Finding out how each part fits in with the others
Comparing businesses in the same industry

Format of Common sized statement

The format of common sized statement is tabulated below:

Particulars	Amount	% of Net Sales
Net sales	10,00,000	100%
Cost of goods sold	6,00,000	60%
Gross profit	4,00,000	40%
Net profit	2,00,000	20%

Key Difference between Comparative & Common Size Statement

Let's say an investor is looking at how a retail business has done in the last two years. They can observe that net profit has gone up by 5% and costs have gone up by 15% by comparing statements. This shows that things are getting less efficient.

A normal size statement, on the other hand, shows that administrative expenditures now account for 40% of revenue instead of 25%. This means that the overhead costs are excessively high. These facts work together to help you make smarter decisions about where to put your money.

Comparative and Common Size Statements are quite helpful when it comes to financial analysis. One shows you how things have changed over time, and the other shows you how the company's money works. All of them work together to help you make good financial choices, set performance goals, and plan for the future.

If you're a business student or a corporate decision-maker, learning how to use these tools will help you understand how well a company is doing financially in more ways than just looking at the numbers.

Key Difference between Comparative and Common Size Statement is tabulated below:

Criteria

Comparative Statement

Common size statement

Purpose

To show changes over time

To show internal structure in percentages

Expression

Shows absolute % change

Expressed as a % of base value (sales/assets)

Focus

Horizontal analysis

Vertical analysis

Useful for

Tracking growth trends

Comparing proportions among companies/items

Did ypu know?

After the Great Depression in the 1930s, common-size financial analysis became more prevalent. Investors understood that it wasn't enough to merely look at big figures; they needed to know how much of their money went to costs, debts, and assets to avoid future economic disasters.

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Frequently Asked Questions (FAQs)

Which is better, a Common Size Statement or a Comparative Statement?

There is no "better" choice; each one has its own purpose. Comparative statements help you recognize how things have changed throughout time. Common size statements are better for looking at a company's structure or comparing it to another company.