What type of financial analysis involves dividing all financial statement numbers by sales for the year?

Common-Size Analysis is a financial analysis technique that standardizes financial statements by expressing all line items as a percentage of a single number, typically total sales or revenue for the year. This approach allows for an easy comparison of the financial performance of a company over time or against other companies, regardless of their size. By dividing all financial statement figures by sales, stakeholders can assess the relative importance of various components, such as cost of goods sold, operating expenses, and net income, in relation to sales. This standardization highlights the efficiency and profitability of a company, offering insights into how much of each dollar earned contributes to net profit.

In contrast, Trend Analysis focuses on the movements of financial metrics over time, Comparative Financial Analysis examines the financial statements of different entities to assess performance relative to peers, and Horizontal Analysis analyzes the differences in financial data across consecutive periods to identify growth patterns or issues. These methods serve different purposes and provide different insights compared to Common-Size Analysis.