Common Size Balance Sheet

Posted in Finance, Accounting and Economics Terms, Total Reads: 82
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Definition: Common Size Balance Sheet

Common size balance sheet is a tool of financial analysis in which every item is expressed as a percentage of a common item. Assets are taken as a percentage of total assets and liabilities or stockholder equity as a percentage of total liabilities or total stockholder equity.

The percentages calculates can be compared with the previous year percentages or of the other firm in the same industry or the other industry, as the numbers are bought to the common base

Thus common size balance sheet help in both intra firm and inter firm comparison.

In order to make a common size balance sheet and extra column is added in which percentages are calculated.


Example: 

PARTICULARS

2016

 

$

%

Share capital

 

 

equity share capital

1000

42.64

capital reserve

90

3.84

general reserve

500

21.32

sinking fund

90

3.84

 

 

Shareholder's Fund

1680

71.64

long-term debt(net worth)

450

19.19

 

 

Current Liabilities

 

sundry creditors

200

8.53

other creditors

15

0.64

 

 

Total Liabilities

2345

100.00

 

 

Fixed Assets

 

building

800

34.12

land

198

8.44

furniture and fittings

77

3.28

Total Fixed Assets

1075

45.84

 

 

Current Assets

 

debtors

450

19.19

cash

200

8.53

stock

320

13.65

Total Current Assets

970

41.36

 

 

investments

300

12.79

 

 

Total Assets

2345

100.00

Equity share capital is 1000, equity share capital as a percentage of total liabilities is (1000/2345)*100=42.64%


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