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    Common Sized Financial Statement Creation

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    Common Sized Financial Statements

    Linden Corporation has a 10% market share in its industry. Below are income statements ($millions) for Linden and for the industry.

    Income Statement

    Linden Industry

    Sales $6,000 $64,000
    Cost of goods sold 3,200 33,650
    Gross margin $2,800 $30,350
    Sales and marketing $430 $3,850
    Engineering 225 2,650
    Finance and administration 650 4,560
    Total expenses $1,305 $11,060

    EBIT $1,495 $19,290
    Interest expense 230 4,500
    EBT $1,265 $14,790
    Tax 500 5,620
    Net income $765 $9,170


    A. Develop common size income statements for Linden and the industry as a whole.
    B. What areas should management focus on to improve performance, and what kind of issues should be examined or looked at in each area?

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    Solution Summary

    Using the Linden Corporation exercise as an example, this file contains detailed instructions for the creation and analysis of a common sized financial statement.