Linden Corp. has a 10% market share in its industry. Below are income state- ments ($millions) for Linden and for the industry.
|
|
Linden
|
Industry
|
|
Sales
|
$6,000
|
$64,000
|
|
Cost of goods sold
|
3,200
|
33,650
|
|
Gross margin Expenses:
Sales and marketing
|
$2,800
$430
|
$30,350
$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 sized 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 for in each area?