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Describe what “common-size” means and why it is used in financial analysis.

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Assessment Descriiption
Chapter 6 provides various exhibits regarding common-size balance sheets or income statements. Refer to Exhibit 6.3 Common-size Financial Statements in the textbook and review the common-size approach. Describe what “common-size” means and why it is used in financial analysis. Using a company from the approved list, perform common-size analysis on the balance sheets or income statements for at least two fiscal years. What does the information tell you? How can you use that information to compare companies within the same industry to each other?

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