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    Common-size income statements and financial revenue

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    I am to create a common-size income statement for Ford Motor Co. My textbook says that in a common-size statement, you set total sales as the denominator and all other sources of income as a percentage of that number. However, for a company like Ford, there is "financial service revenue" in addition to the automotive sales and revenue, to make up the total revenue on the income statement.

    My question is, do I include the financial service revenue in the 100%, so that automotive sales and revenue would make up 85% and the financial revenue 15% of total sales? OR do I only include the automotive sales and revenue for the 100%, so that the Total Revenue is more than 100%?

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    Solution Preview

    Please refer to the attachment.
    Usually the denominator for common-size income statement is the total revenue, i.e., the sum of automotive sales and Financial services ...

    Solution Summary

    This solution discusses common-size income statements and financial revenue.