Common size income statement

My favorite KPI to implement in a dashboard is an extension of the Return on Sales ratio. This KPI or set of ratios is formally called Common size income statement but is often seen in an income statement as a percentage of Sales. I first came across this in an international business class on evaluating company profitability through financial statement analysis.

Note

There is an additional sample data Excel spreadsheet available for download from your account at http://www.PacktPub.com that is used in this chapter. Its name is IS3yr.xls.

Common size income statement lends itself particularly well to dashboards presented as a period-over-period line graph that allows you to see the shape and trend of the data, rather than just the numbers.

To create a common size income statement, start with the key subtotals of a standard income statement divided by total revenue. Here is an example of XYZ Company from an income statement template with a percentage of Sales column...