Analysis of Banking Sector Financial Reports Using the Common Size Method
Case Study of a Bank in Bandung
DOI:
https://doi.org/10.55208/bq0afn22Keywords:
Common Size Analysis, Financial Performance, Financial StatementsAbstract
This study is to evaluate the financial performance of a bank in Bandung utilizing the common size technique from 2021 to 2023. The standard size approach is a financial statement analysis methodology employed to evaluate a company's financial structure by comparing each item in the financial statement to total assets (for the balance sheet) and total revenue (for the income statement). This method presents each element of the financial statement as a percentage, enabling comparisons across periods and firms and offering a deeper understanding of proportions and financial patterns. The data utilized in this study were sourced from the company's audited annual reports, ensuring excellent authenticity and dependability.
The analysis results indicate that the bank under examination demonstrates robust and steady financial performance throughout the assessment period. The financial position statement reveals a consistent structure of assets, liabilities, and equity, demonstrating adaptability to macroeconomic dynamics. Furthermore, the income statement shows a year-over-year improvement in the ratio of operating expenses to income, alongside a rise in net profit, indicating proficient cost management and effective revenue strategies. The fluctuations in percentages of various financial items were effectively recognized and thoroughly analyzed to elucidate the trends in bank performance.
The analysis revealed that the bank successfully preserved its financial performance despite external hurdles, including global economic uncertainties and market swings. These findings are expected to help firm management assess internal performance and devise more effective future business strategies. Furthermore, the findings of this study may serve as a reference for investors, financial analysts, and academics in evaluating the financial status of the banking industry with a more objective and informed perspective. The common-size technique provides a comprehensive overview of a bank's financial status and operational performance, serving as a valuable tool for strategic financial decision-making.
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