It is also known as a component percentage statement is a financial tool for studying the key changes and trends in the financial position and operational result of a company. Hence each item in the statement is stated as a percentage of the aggregate, of which that item is a part.
It is used for comparing enterprises which differ substantially in size as it provides insight into the structure of financial statements. Inter-firm comparison of the company’s position with the related industry as a whole is possible with the help of common size statement analysis.