Then, Aim to Determine What ‘Normal’ Is...
e We review 40-year income statement patterns and focus on ‘average’ / ‘normal’ levels of USA Inc.’s revenue drivers (primarily related to taxes) and expense drivers (by category) as a percent of revenue, as a starting point to help define ‘average’ / ‘normal.’
e Established businesses typically determine their expense levels based on their revenue trend / outlook.
e In a perfect world, the government (and its citizens) would continually review the multiple variables in the income statement of USA Inc. (in a bipartisan way) and would
work hard to foster compromise, in order to optimize revenue and expenses for the long term AND the short term.
KP www.kpcb.com USA Inc. | What Might a Turnaround Expert Consider? 223
Considering USA Inc.
‘Normal’ / Average Financial Metrics / Ratios For...
1) Revenue Growth 2) Revenue Drivers as Percent of Revenue 3) Expense Growth by Category
4) Category Expenses as Percent of Expenses
KP www.kpcb.com USA Inc. | What Might a Turnaround Expert Consider? 224
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