Common Size Income Statement

Common Size Income Statement presents each and every line item which is available in the income statement of the company in form of the relative percentage of sales and helps in analyzing the items that are driving the profits of the company.

What is Common Size Income Statement Analysis?

The term “common size income statement” refers to the presentation of all the line items in an income statement in a separate column in the form of relative percentages of total sales primarily. It is not another type of income statement, but it is just one type of technique used by financial managers to analyze the income statement of a company.

  • In financial statement analysis, it is used to compare companies that operate in the same or different industries or to compare the performance of the same company over different time periods.
  • Further, it helps a financial analyst to establish a relationship between each of the accounts in the income statement and the total sales and eventually helps in ascertaining how each of the accounts affects the total profitability.
  • From the perspective of an investor, it gives a clear picture of the various expense accounts, which are subtracted from the total sales to generate the net income.
Common Size Income_Statement

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Examples of Common Size Income Statement Format

Let us take the example of Apple Inc. to understand the concept and see the trend in the financials of the last three years.

All Amount in Millions

Total Revenue$2,65,595$2,29,234$2,15,639100.00%100.00%100.00%
Cost of Revenue$1,63,756$1,41,048$1,31,37661.70%61.50%60.90%
Gross Profit$1,01,839$88,186$84,26338.30%38.50%39.10%
Operating Expenses
Research & Development$14,236$11,581$10,0455.40%5.10%4.70%
Sales, General & Admin$16,705$15,261$14,1946.30%6.70%6.60%
Operating Income$70,898$61,344$60,02426.70%26.80%27.80%
Add Income and Expense Items$2,005$2,745$1,3480.80%1.20%0.60%
Earnings Before Interest and Tax$72,903$64,089$61,37227.40%28.00%28.50%
Interest Expense$0$0$00.00%0.00%0.00%
Earnings Before Tax$72,903$64,089$61,37227.40%28.00%28.50%
Income Tax$13,372$15,738$15,6855.00%6.90%7.30%
Net Income$59,531$48,351$45,687$22.40%21.10%21.20%

For instance, it can be seen that the gross profit margin and operating income margin has been quite stable over the last three financial years. However, the net income has witnessed a slight improvement during the same period. An analyst can further deep dive to determine the reason behind the same to make a more meaningful insight.

Here you can download the detailed excel template.

Common Size Format of Colgate’s Income Statement

Vertical Analysis of Colgate Income Statement

Advantages of Common Size Income Statement Analysis


  • Many financial experts see the common size income statement as useless because there isn’t any approved standard proportion of each item to the total sales.
  • If year after year preparation of the income statement of a particular company is not consistent basis, then perform any comparative study of common size statement income statement may end up being misleading.



In conclusion, it can be said that the common size income statement facilitates easy comparison. It makes analysis much easier such that the analyst can see what is actually driving the profit of a company, and then compare that performance to its peers. It allows an analyst to look at how the performance has changed over the period of time. From an investor’s perspective, a common size income statement helps in spotting patterns in the performance of the company that a raw income statement may not uncover.

This article has been a guide to Common Size Income Statement. Here we what is Common Size Income Statement analysis, its format with excel examples, advantages, and disadvantages and limitations. You may learn more about from the following articles –

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