Common-size financial statements exclude the dollar amount as a relevant variable in the analysis,which makes comparison of one period with the next more meaningful.

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Common-size financial statements express each line item as a percentage of a base amount, usually total assets or total revenue. By eliminating the dollar amount, the focus shifts to each line item's proportionate representation in the financial statement, making it easier to compare and analyze different periods or companies.

Common-Size Financial Statements Exclude the Dollar Amount as a Relevant