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Competition Bikes Incorporation
Financial and Operational Analysis
Competition Bikes Incorporation is a manufacturer of sports cycles and is a famous brand among professional cyclists. This report presents a financial and operational analysis for Competitors Bikes Incorporation for the past three financial years, which include year 6, 7 and 8. The financial analysis presented in this report includes horizontal and vertical analysis of the three years’ income statement and balance sheet of Competition Bikes Incorporation, trend analysis of sales including sales forecasting for the next three years and ratio analysis. In the ratio analysis of the company, comparative analysis has been conducted by keeping in view the ratios for Competitor Bikes Incorporation’s major competitor “Two Wheel Racing”. On the other hand, the operational analysis includes analysis of working capital of the company, evaluation of internal control of the company with respect to the purchasing department and its operations and evaluation of Competition Bikes Incorporation’s compliance with the requirements of Sarbanes Oxley Act. Each of these analysis and evaluations are presented in sequential manner in the following sections.
Horizontal Analysis of Competition Bikes Incorporation’s Financial Statements
Keeping in view the horizontal analysis for Competition Bikes Incorporation for the last three years, it is observed that the company has managed to increase its sales in 7th year in comparison with 6th year, i.e. from $ 4,485,000 in 6th year to $ 5,980,000 in 7th year, which represents an increase in sales by $ 1,495,000. At one hand, sales revenue for the company has increased considerably, but on the other hand cost of sales also increased significantly as there were increased units sold by the company. However, it can be noted that the increase in cost of sales for the company from 6th

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