Common Size
Analysis
Business Journalism Professors
Jan. 3, 2014
Donald W. Reynolds National Center
For Business Journalism
At Arizona State University

Strictly Financials
2
n 
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n 
n 
n 

James K. Gentry, Ph.D.
Clyde M. Reed Teaching Professor
School of Journalism and Mass Communications
...
Common Size Analysis
n 

n 

A technique that turns all financial
statement entries into percentage of
revenue
Then can ...
Why Common Size
n 
n 

n 

n 
n 

Identify trends
Identify what causes changes in totals
on financial statements
Easi...
Doing Common Size
n 
n 

n 

For IS, divide Revenue into all entries.
For BS, divide each total category into
its categ...
Comparable Statements
n 

n 

Often have to restructure Income
Statement to the In-the-Box format we
have studied
Typica...
Trends in Margins
n 

n 

n 
n 

How have Cost of Goods Sold (CGS)
and Sales, General and Administrative
(SGA) changed...
Common Size, Ratios
n 

These techniques let you drill below the
surface and start developing a more
complete picture of ...
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Business Journalism Professors 2014: Common Size Analysis by Jimmy Gentry

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Jimmy Gentry presents "Common Size Analysis" during the Reynolds Center for Business Journalism's annual Business Journalism Week, Jan. 4, 2014. Gentry is the Clyde M. Reed Teaching Professor at the University of Kansas' School of Journalism and Mass Communications.

The annual event features two concurrent seminars, Business Journalism Professors and Strictly Financials for journalists.

For more information about business journalism training, please visit http://businessjournalism.org.

Published in: Career, News & Politics, Business
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Business Journalism Professors 2014: Common Size Analysis by Jimmy Gentry

  1. 1. Common Size Analysis Business Journalism Professors Jan. 3, 2014
  2. 2. Donald W. Reynolds National Center For Business Journalism At Arizona State University Strictly Financials 2
  3. 3. n  n  n  n  n  James K. Gentry, Ph.D. Clyde M. Reed Teaching Professor School of Journalism and Mass Communications University of Kansas jgentry@ku.edu Strictly Financials 3
  4. 4. Common Size Analysis n  n  A technique that turns all financial statement entries into percentage of revenue Then can look at percentage change and percentage point change Strictly Financials 4
  5. 5. Why Common Size n  n  n  n  n  Identify trends Identify what causes changes in totals on financial statements Easier to compare percentages than raw numbers Easier to compare companies Easier to compare company with industry averages Strictly Financials 5
  6. 6. Doing Common Size n  n  n  For IS, divide Revenue into all entries. For BS, divide each total category into its category items. For example, divide Total Assets into each category of assets. For CF, divide each total category into its category items. Strictly Financials 6
  7. 7. Comparable Statements n  n  Often have to restructure Income Statement to the In-the-Box format we have studied Typical problems come from items we would consider Other Income/Expenses Strictly Financials 7
  8. 8. Trends in Margins n  n  n  n  How have Cost of Goods Sold (CGS) and Sales, General and Administrative (SGA) changed? What does that mean for Gross Profit Margin and Operating Profit Margin? How does Net Profit Margin move? Importance of using Basis Points Strictly Financials 8
  9. 9. Common Size, Ratios n  These techniques let you drill below the surface and start developing a more complete picture of the company’s performance n  n  n  Strengths Weaknesses Strategic effectiveness of the firm Strictly Financials 9
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