In a common size Statement of Profit amp Loss the amount of net revenue from operations is assumed t...........

General Accounting Principles Financial statement analysis

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In a common size Statement of Profit & Loss, the amount of net revenue from operations is assumed to be equal to

100

1000

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Explanation:

The common-size statements, balance sheet and income statement are shown in analytical percentages. The figures are shown as percentages of total assets, total liabilities and total sales. The total assets are taken as 100 and different assets are expressed as a percentage of the total. Similarly, various liabilities are taken as a part of total liabilities.

These statements are also known as component percentage or 100 per cent statements because every individual item is stated as a percentage of the total 100. The short-comings in comparative statements and trend percentages where changes in items could not be compared with the totals have been covered up. The analyst is able to assess the figures in relation to total values.