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Managing Internal Cost and Controlling Finances
Pollyette Milligan
January 13, 2014

WGU Financial Analysis

Evaluation of Company Operational Strengths and Weakness
What better way to determine the stability and forecast for a company than to analyze its financial systems. In the financial world this is done through several analysis breakdowns that show not only the year by year changes but the trends that cause the changes as well. In this report a financial analysis of the Competition Bikes, Inc. will be conducted covering; horizontal analysis, which is a comparative study of a balance sheet or income statement for two or more periods, to compute both total and relative variances for each line item (businessdictionary.com, 2014). A vertical analysis or the technique for identifying the relationship between items in the same financial statement by expressing all amounts as the percentage of the total amount taken as 100 (businessdictionary.com, 2014) will also be shown. In a balance sheet, for example, cash and other assets are shown as a percentage of the total assets and, in an income statement, each expense is shown as a percentage of the sales revenue. Financial statements using this technique are called common size financial statements. (businessdictionary.com, 2014) In order to assist the company in determining the possibilities over the next few years, included in this report will be a trend analysis which is a method of time series data (information in sequence over time) analysis involving comparison of the same item (such as monthly sales revenue figures) over a significantly long period to (1) detect general pattern of a relationship between associated factors or variables, and (2) project the future direction of this pattern (businessdictionary.com, 2014). The final form of financial analysis to be covered is ratio analysis, which, is

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