Common-Sized Income Statement Revenue and expense data for the current calendar year for Lyons Electronics Company and for the electronics industry are as follows. Lyons Electronics Company data are expressed in dollars. The electronics industry averages are expressed in percentages. Lyons Electronics Company Electronics Industry Average Sales $ 7,500,000 100 % Cost of goods sold (4,125,000) (61.0) Gross profit $3,375,000 39.0 % Selling expenses $ (2,250,000) (23.0) % Administrative expenses (525,000) (10.0) Total operating expenses $ (2,775,000) (33.0) % Operating income $600,000 6.0 % Other revenue and expense: Other revenue 30,000 3.0 Other expense $ (7,500) (1.0) Income before income tax $ 622,500 8.0 % Income tax (187,500) (2.5) Net income $435,000 5.5 % a. Prepare a common-sized income statement comparing the results of operations for Lyons Electronics Company with the industry average. If required, round percentages to one decimal place.

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20 December, 09:31

Common-Sized Income Statement Revenue and expense data for the current calendar year for Lyons Electronics Company and for the electronics industry are as follows. Lyons Electronics Company data are expressed in dollars. The electronics industry averages are expressed in percentages. Lyons Electronics Company Electronics Industry Average Sales $ 7,500,000 100 % Cost of goods sold (4,125,000) (61.0) Gross profit $3,375,000 39.0 % Selling expenses $ (2,250,000) (23.0) % Administrative expenses (525,000) (10.0) Total operating expenses $ (2,775,000) (33.0) % Operating income $600,000 6.0 % Other revenue and expense: Other revenue 30,000 3.0 Other expense $ (7,500) (1.0) Income before income tax $ 622,500 8.0 % Income tax (187,500) (2.5) Net income $435,000 5.5 % a. Prepare a common-sized income statement comparing the results of operations for Lyons Electronics Company with the industry average. If required, round percentages to one decimal place.

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Schmidt · Answer 1

In common sized income statement, each line item is expressed as a percentage of sales turnover and compared to the percentage industry standard for analysis purpose.

Lyon % Industry %

Revenue 7,500,000 100 100

Cost of goods (4,125,000) 55 61

Gross profit 3,375,000 45 39

Selling expenses (2,250,000) 30 23

Admin Expenses (525,000) 7 10

Total Operating Exp (2,775,000) 37 33

Operating income 600,000 8 6

Other revenue 30,000 0.4 3

Other expenses (7500) 0.1 1

Income before tax 622,500 8.3 8

Income Tax 187,500 2.5 2.5

Net Income 435,000 5.8 5.5