# Income statement in percentage

Percentage account is understood as a percentage of the result of expressing each equity in the income statement as a percentage of total sales.

When analyzing the financial statements of a company , it is necessary to establish comparisons with other companies in the sector. These comparisons will be of vital help to determine the attractiveness of the company analyzed. The problem of comparisons is that there may be large differences between them based on their size (different sales volume, different amortization methods or different financial income / expenses to name a few examples).

Using the income statement as a percentage of total sales will help us neutralize the effect of the different scale between companies. Therefore, the income statement, expressed as a percentage, allows us to establish a better comparison between companies in the same sector by relativizing the figures of each estate based on total sales.

## Example of income statement in percentage

Below is the balance sheet of company X and company Y, both in absolute values ​​and as a percentage.

 Company X % Company Y % Ordinary income 20,000 100% 48,000 100% Employee compensation expenses 6,000 30% 13,500 28% Amortization 2,500 13% 8,200 17% Raw Material Consumption 1,000 5% 2,000 4% Result of exploitation 10,500 53% 24,300 51% Financial income 1,500 8% 1,200 3% Financial expenses 800 4% 7,000 fifteen% Profit before tax (BAI) 11,200 56% 18,500 39% Income tax expenses 3,000 fifteen% 800 two% Result of the excersice 8,200 41% 17,700 37%

## Conclusions drawn by expressing the income statement as a percentage

Depending on whether we look at the figures in absolute values ​​or as percentages, we could draw different conclusions. Below are some examples of these.

• Operating result:In absolute terms, company Y has an operating result significantly higher than that of company X (24,300 versus 10,500). However, seeing the figures as a percentage, we observe that the result of company X is slightly higher than that of company Y (53% versus 51%). This is mainly due to its lower level of amortization.
• Profit before taxes:Again in absolute terms the company Y has a more bulky result (18,500 versus 11,200), but in percentages it is company X that has a better result (56% versus 39%). This is mainly for financial expenses. Company Y could be financing a project with a debt issue and consequently have a higher interest burden. Therefore, this would be ballasting your profit before taxes.
• Exercise result:Again the same case. Company Y has a higher result for the year than Company X (17,700 versus 8,200), but in relative terms it is the opposite (41% versus 37%). If you look, we see that the difference between the two (as a percentage) is no longer as large as it happened with the profit before taxes. This is because company X has a higher tax burden than company Y (15% versus 2%). Even so, company X ends up having a slightly higher result for the year as a percentage of sales than company Y.
##### byAbdullah Sam
I’m a teacher, researcher and writer. I write about study subjects to improve the learning of college and university students. I write top Quality study notes Mostly, Tech, Games, Education, And Solutions/Tips and Tricks. I am a person who helps students to acquire knowledge, competence or virtue.