What does Common Sizing enable analysts to do?

Common Sizing is a financial analysis technique that helps analysts present financial statements in a way that makes it easier to compare performance across different time periods or between different entities. By converting financial figures into percentages of a common base measure—such as total revenue or total assets—analysts can evaluate proportions and trends more clearly. For instance, in a common-sized income statement, each line item is expressed as a percentage of total revenue, allowing for quick assessment of how costs and profits relate to revenue over time or between different companies regardless of their size. This method is particularly useful in benchmarking and analyzing relative performance, making it an essential tool for financial analysts.