Accounting Dictionary

Common Size Balance Sheet

A common size balance sheet shows all items as a percentage of total assets.

When a business increases or decreases in size, a common size balance sheet can help you make rational comparisons. For example, in 2016 ABC Company had $40,000 in cash which was 15% of total assets. In 2017 they had $60,000 in cash, but it was still 15% of assets. At first glance someone might think the company was keeping too much in cash in 2017, but when they do the percentages it is easy to see the increase in dollars is in proportion to the asset growth.

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