Question

Common-size percentages are often used to compare the statements of companies of unequal size. the condensed income statements of companies a and b are given below. enter in the spaces provided the amounts expressed in common-size percentages.

Answer 1

Using the sales, start by dividing the sale with the same number...this will give you 100%. Then, divide the cost of goods sold to the sales, the gross margin to the sales, selling expenses to the sales, administrative expenses to the sales, total operating expenses to the sales, and income to the sales. That's how you get your common-size percentages for each company. You can do this on excel by typing the = select the cell, and divide to the desired cell. Lock the sales cell and bring your courser to the end of the line until you see a plus sign. Click and drag down. It should do all of them for you.