What does expressing items as percentages in common size statements allow?

Easy comparison with the previous year's results

Expressing items as percentages in common size statements allows for easy comparison with the previous year's results or with the results of some other firms. By expressing each item as a percentage of a common item (usually the total), the financial data are standardized and brought to a common base, making it simpler to compare financial performance and trends over different periods. Common size statements are widely used in financial analysis because they allow for standardized comparisons between companies of different sizes and industries, as well as comparisons of a company's own performance over different years. This aids in identifying changes in financial structure, cost patterns, and revenue generation, providing valuable insights for decision-making and strategic planning.