Limitations of a Common Size Balance Sheet:

Source: rudzhan / Freepik
Source: Flat Icons / Flaticon

Change in the price level

Any change in market conditions, inflation, and depreciation are not accounted for in the common size balance sheet, making the comparison of statements for different periods inaccurate.

Source: geotatah / Flaticon

Seasonal fluctuation

Companies can have huge variations due to seasonal factors. Components of balance sheets such as assets and liabilities can be affected by seasonal variations.