[Lostinacct99]

I am confused on how to express the income statement data in common-size percent. The book shows that the percentage is analysis amount/base amount x 100. I don't know what the analysis or base amounts are referring to. Can anyone help me?

[morgaine300]

The base amount is the 100%, the one you're using to compare everything else to. For the sake of an income statement, that would be net revenues. (Or net sales. If you don't see the word "net" just use whatever the revenue account is.)

The "amount" is all the numbers on that income statement. Except for the base. You're taking each amount on the statement and dividing it by the net revenues to see what they are as a percent of revenues.

For instance, if net revenues are 1,000,000 and cost of goods sold is 400,000:
400,000/1,000,000 = 40%
This says cost of goods sold is 40% of the net revenues. This way you can compare two companies and see it on a percentage basis rather than the dollar amounts. If a different company has net revenues of 500,000, there isn't much way to compare dollar amounts without turning them into percents.

Do this same division for every number on there.