One of the most important applications of ratio analysis is to compare a companys performance with that of other players in the industry or to compare its own performance over a period of time. Such analyses are referred to as a comparative analysis and trend analysis, respectively.

A common size analysis requires the representation of financial statement data relative to a single financial statement item (or base account or value).

What is the most commonly used base item for a common size balance sheet?

Total assets

Net sales

Net income

Earnings before interest and taxes