Common Size Statement: In this statement each figures are converted into percentage with the help of common base. It helps to analyse the figures are increases or decreases with respect to common base. Importance: · It shows how each number is related to common base. · With the help of it investors or company can easily understand the figures. · It shows how the trend in the market is changes. · With the help of income statement company can find out the percentage increase or decrease with respect of net sales in comparison to previous year. Example : Prepare common size balance sheet of company X with the help of following information: Balance sheet as on 31 st December 2006 Liabilities 2005 2006 Assets 2005 2006 Shares 3,00,000 4,00,000 Goodwill 3,00,000 3,50,000 7% Deben
This blog is totally for education purpose which helps to solve finance related numerical like time value of money, annuity ,perpetuity, technique of capital budgeting, cost of capital, working capital management and hire purchase etc.