From the course: Managerial Finance Foundations

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Common-size financial statements

Common-size financial statements

From the course: Managerial Finance Foundations

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Common-size financial statements

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- In fiscal 2020, Walmart's net income was 13.706 billion. Is that a lot? In that same fiscal 2020 Targets net income was 4.368 billion. Is Walmart doing better than Target? At the end of fiscal 2020, Walmart had inventory of $44.94 billion and Target had inventory of 10.653 billion. So which companies more efficiently managing its inventory? So without some consideration of the differing sizes of these two companies, we really can't intelligently answer these questions. Common size financial statements are an easy and useful tool for transforming financial statement data to adjust for size differences. Simply stated, a common size financial statement is a financial statement in which all the numbers have been divided by sales for the year. The result is a financial statement composed of percentages. Each number is stated as a percentage of sales for the year. Here is the common size income statement for Walmart and for…

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