...Financial Analysis of Competition Bikes, Inc. Competition Bikes, Inc. was founded by one person who saw the need for a light weight, better quality professional bicycle. He built the company from the ground up from his garage. The success of the company relies on accountability and transparency and therefore, a financial analysis is completed on a yearly basis. This process is vital to the success of the company as it gives management the foundation with which to base future long and short term goals. Each financial analysis evaluates horizontal, vertical, trend, and ratio results. A1a. Horizontal Analysis is “A procedure in fundamental analysis in which an analyst compares ratios or line items in a company's financial statements over a certain period of time. The analyst will use his or her discretion when choosing a particular timeline; however, the decision is often based on the investing time horizon under consideration” (Investopedia, Horizontal Analysis, para. 1). According to the Income Statements Competition Bikes, Inc. was strong in many areas from year 6 to year 7. Net sales increased by $1,495,000 from Y6 to Y7 which is a 33.3% increase. When looked at with the cost of goods sold which increased only 31.8% or $1,048,000 during the same time period you can see that the company was successful in increasing its gross profit. Gross profit increased $447,000 from Y6 to Y7 or 37.5%. Increased profit is a big strength for the company. Operating expenses were...
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...JET2 Financial Analysis Task 1 Competition Bikes, Inc. Submitted by: Michelle Beacham Competition Bikes, Inc. is a manufacturer of bicycles for professional and other highly accomplished riders. The bicycle produced is a light weight, shaft driven bicycle that is custom made to fit each cyclist. It has been extremely popular among professional riders; however, recently sponsors have reduced funding to the riders causing a decline in sales volumes. This summary will be evaluating the strengths and weaknesses of the Competition Bikes, Inc., analyzing the working capital of the company, evaluating the internal controls, and Competition Bikes’ compliance with the Sarbanes-Oxley Act. Evaluation of the strengths and weaknesses The first evaluation of strengths and weaknesses of Competition Bikes, Inc. will be a horizontal analysis of the income statement and balance sheet. A horizontal analysis is a comparison of financial information across a particular time period. A comparison of the periods is completed based on a historical base period. For instance, we could compare sales for the current year as compared to the prior year. Each significant variance is investigated to determine the cause of the fluctuation (Accounting Tools, 2015). Gross profit is the difference between “Net Sales” and “Cost of Goods Sold”. Gross profit is up 37.5% in year 6 with a significant decline of 16.3% in year 7. The decline in year 7 is directly attributable to the decline in sales...
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...A.1 Horizontal, Vertical, Trend and Ratio Analysis Executive Summary The financial assessments of Competition Bikes, Inc. (CB) are based upon the income statements and balance sheets from Calendar Years 6, 7 and 8 to gauge the operation efficiencies of the company. In general, the analysis shows that, between Year 6 and 7, Competition Bikes, Inc. had a large growth in new earnings that was not capitalized in Year 8. The Net Earnings has moved from a positive 313.4% down to a -81.6% loss. This will be evaluated in detail below. A.1.a. Horizontal Analysis Results Horizontal Analysis is the comparative analysis of each line item across the timeframes of the company and is calculated in dollars and percentages. The analysis will look at how the accounts have changed from one year to the next. The formulas used are: Dollar change = This Year’s Balance – Last Year’s Balance Percent change = Dollar Change . Last year’s Balance The horizontal analysis will provide an analysis of the financial performance of Competition Bikes, Inc. and provides an overview of potential trends of the company (Ashfaq, n.d.). The horizontal analysis between Years 7 and 8 further shows that total revenues decreased by 15.0% and total expenses decreased by 69.1%. As result of this, Earnings Before Income Taxes (EBIT) also decreased 313.4% and net earnings reduced by 81.6%. INCOME STATEMENT The horizontal analysis is based on the income statement for Years...
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...Competition Bikes Summary Report Sherri Silva Western Governor's University Abstract Competition Bikes, Inc. is a successful business that makes bikes for professional cyclists helping them to live their dreams and compete in major cycling events to include triathlons and other competitive cycling sports. After three years in business, Larry Ferguson, the business owner decided to take the company public in efforts to gain the capitol needed to build the current two manufacturing facilities. Both facilities are staffed to manage an increase in bike sales if necessary. Competition Bikes, Inc. is unique in that it really honors the quality and design of the bike being sold. Money is spent on research in efforts to ensure the lightest most custom bike is offered to its customers. The company also invented the CarbonLite which was the first designed bike to offer drive shaft technology. Although Competition Bikes, Inc. has experienced tremendous success over the past eight years in business, they have also experience a 15% sales decline over the most recent years. It is imperative that a financial analysis take place in efforts to trend where the financial issues are arising from allowing Competition Bikes, Inc. to explore other means of increasing profit margins. In completing a financial analysis for Competition Bikes, Inc. one must analyze financial data to include performing a horizontal analysis. This type of analysis is designed to show trends or changes between years...
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...sold had been disproportionate with growth of sales. En Ghani was informed that one of the reasons for the increase in cost was because of the current purchasing system that contributes to redundant purchasing and high inventory holding costs. Siti Aminah, the Chief of Financial Officer was asked to review the current purchasing system and suggested the need to implement a new computerized purchasing system that would help relieve some of its manual operations and at the same time would ensure it has the proper controls in place. En Ghani requested a formal report on current purchasing system and suggestion for a new system before the next management meeting which would be in two weeks time. En Ghani assigned Siti Aminah on the special task instead of the senior Chief Production Officer and she did not have any experience in system and technology. The new system must be able to reduce costs, enhance control and provide easy management of users and services in qualitative and quantitative ways. CHARACTERS En Ghani : as the new appointed Managing Director of Penda Cable Industry Berhad, who reviewed past year Financial Report and asked for formal report from Siti Aminah. Siti Aminah : the Chief of Financial Officer that being asked to make formal report instead of the Senior Chief of Financial Officer. CURRENT PURCHASING SYSTEM IN PCI Purpose : to ensure the purchase of raw material (exclude external Aluminium cable scap) that was required for the manufacturing of...
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...the accounts have fluctuated from one year to the next. The formula used is: Dollar change = This Year’s Balance – Last Year’s Balance. Percent change = Dollar Change . The income statement from year # 6 to year # 7, exhibited a sales increase of 33%. There was only a 31 percent increase in product costs. This decrease in cost of materials was offset by sales expense of 33 percent and an increase in general operating espense – totaling 20 percent.. These line expenses both increased from year # 6 through year # 8. These increases offset the profit from an increase in sales. CB experienced greater gross profits in year # 7 than year # 6. The balance sheet also shows a growth in assets. Total assets increased by 2.9%. Liabilities increased to only a slight 1.2% . This is a positive indicator of growth for Competition Bikes, Inc. A comparative review of the CB income statement from year # 7 to year #8, shows a decrease in sales by 15...
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...Financial Analysis – JET2 Task 1 Report for Competition Bikes, Inc. Competition Bikes, Inc was formed in 2001 and manufactures professional and performance bicycles used in a variety of racing events for expert riders. Bicycles produced by this company are ridden by 60% of all race winners and word of mouth has been their main marketing strategy. Competition Bikes is also the first company to use drive shaft technology in their bikes, which sets them apart from their competitors. A horizontal, vertical, trend and ratio analysis of Competition Bikes has been completed and is summarized in the review below. HORIZONTAL, VERTICAL, & TREND ANALYSIS Beginning with a comparison between year 6 and 7, sales in units rose from 3000 to 4000 which was a 33.3% increase in the number of units sold and is reflected in total Net Sales which rose from $4,485,000 to $5,980,000. Consistent with this same increase of 33.3% were sales commissions, distribution network support, transportation out costs, and total selling expenses. The total cost of goods sold increased 31.8%; this helped the company produce their product at a lower cost adding to their overall profit margin. The gross profit margin from year 6 to year 7 increased 37.5%. The company increased both their advertising and research and development 37.5% between year 6 and 7, this can strengthen their market base and aide in the development of new or improved products. Administrative salaries increased 21.4% and Executive...
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...Johnson company ethics and compliance is very vital for their entire company with in the United States and around the world. Johnson and Johnson have a well written business code of conduct and ethics for directors and executive officers. Compliance with the government rules and regulations within the United States and around the world involving ethics is valued by the J&J’s company and held very strongly. The business code of conducts and ethics sets the rules for behavior related conflicts with interest, gifts, compliances, and fair practice. The conflicts of interest should be avoided at any cost even if it is not harmful to the company. The executives are not allowed to accept gifts or even give gifts such as a lunches or dinners, or any other gifts to the supplier, investors, or even the customers on behalf of the company ("Code of Business Conduct & Ethics For Members of The Board of Directors And Executive Officers", 1997-2013). It is stated in the policies of Johnson and Johnsons that the company will and should follow all the laws of each country in which the company does business. According to the ("Code of Business Conduct & Ethics For Members of The Board of Directors And Executive Officers", 1997-2013), every executive officers and directors must sign a certificate of compliance with the code of business conducts and ethics each year. How Financial Markets work in the United States There is a lot of confusion when talking about the financial markets...
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...Kids Clothing Store Business Plan Plan Outline 1.0 Executive Summary Mission Objectives Keys of Success 2.0 Company Summary Company Ownership Start-up Summary Company Locations and Facilities 3.0 Products Products Description Competitive Comparison Sales Literature Sourcing Technology Future Product 4.0 Market Analysis Summary Market Segmentation Target Market Segment Strategy Market Needs Market Growth Industry Analysis 5.0 Strategy and Implementation Summary Competitive Edge Marketing Strategy Sales Strategy Sales Forecast Milestones 6.0 Management Summary Organisational Structure Management Team Personnel Plan 7.0 Financial Plan Important Assumptions Break-even Analysis Projected Profit and Loss 1.0 Executive Summary Young parents, whether father or mother, are intereted about latest trends so they want their kids to look smart and beautiful by wearing dresses of the latest design. In order to fulfil young parents' expectations and demands for clothes that suit their kids whether boys of girls, T'square will be the ideal concept store. T'square is a new firm will be started-up to provide good quality and latest trend of children's clothing. We present an extensive range of kids wear that are manufactured using different fabrics such as Cotton, Silk, Wool...
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...Financial Statement Analysis JET2 Task 1 Evaluate the company’s operational strengths and weaknesses: A-1a Horizontal Analysis is defined as the following: A procedure in fundamental analysis in which an analyst compares ratios or line items in a company's financial statements over a certain period of time (Investopedia). Vertical Analysis is defined as the following: “is a popular method of financial statement analysis that shows each item on a statement as a percentage of a base figure within the statement” (Accounting, formanagerment.org). Trend Analysis is defined as the following: An aspect of technical analysis that tries to predict the future movement of a stock based on past data. Trend analysis is based on the idea that what has happened in the past gives traders an idea of what will happen in the future (Investopedia). Ratio Analysis is defined as the following: Ratio Analysis is a form of Financial Statement Analysis that is used to obtain a quick indication of a firm's financial performance in several key areas (Mathis). Competition Bikes, Inc. Comparative Income Statements Revenue Net Sales- The company’s net sales increased from year 6 to 7 by $1,495,000.00 or as the spreadsheet shows 33.3%. This is a very strong in increase. However, year 7 to 8 showed a net sales decreased of -$897,000.00 or -15%. This decrease shows a weakness, it is vital that net sales grow or at least stay even. Gross Profit- Gross profit shows an increase from...
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...Types of Liabilities Liabilities are classified in different types. The two main categories of these are current liabilities and long-term liabilities. Current Liabilities Current liabilities are often loosely defined as liabilities that must be paid within a single calender year. For firms with operating cycles that last longer than one year, current liabilities are defined as those liabilities which must be paid during that longer operating cycle. A better definition, however, is that current liabilities are liabilities that will be settled either by current assets or by the creation of other current liabilities. Example of current liabilities include accounts payable, short-term notes payable, commercial paper, trade notes payable, and other liabilities incurred in the normal operations of the business. Some of these normal operating costs include salaries payable, wages payable, interest payable, income tax payable, and the current balance of a long-term debt that will be due within a single year. Other long-term obligations, such as bonds, can be classified as current because they are callable by the creditor. When a debt becomes callable in the upcoming year (or operating cycle, if longer), the debt is required to be classified as current, even if it is not expected to be called. If a particular creditor has the right to demand payment because of an existing violation of a provision or debt statement, then that debt should be classified as current also. In situations...
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...not liable for her illness. They would also argue that since they are only the holding company, liabilities should be claimed from the primary blame (Shiba Ltd). 2) Rules: a) S119 Corporations Act (2001): A company comes into existence as a body corporate when it registered with the Australian Securities Investments Commission (ASIC). Company is separate legal entity and it’s separate from its members. [Salomon v Salomon (1897)]. A company is an artificial person who can be sued or sue someone. Therefore, the person who manage the company is not liable for the company liabilities. This create a “corporate veil” between the company and members. In this case, Chow Ltd would argue that Shiba Pty Ltd is separate legal entity which they need not to compensate for Gigi illness. b) S516 Corporations Act (2001): The principle of legal limited liability. Company liabilities are separate from personal assets which are limited by shares. On the facts, plaintiff was trying to ask Chow Ltd for compensation as Shiba Ltd is owned by Chow Ltd. On the facts, holding company have to pay the compensation fee under tort of negligence. 3) Application: a) Duty of care to employees: Defendant is the directing mind and will of the company. [Briggs and James Hardie & Co Ltd (2001)] wish to sue the holding company because of ‘Deeper Pockets’ arguments under vicarious liability. On the facts, plaintiff would argue delegated care & responsibility of employees to subsidiary...
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...Environmental Health & Safety Software‐Based Research Facilities Inspection and Recordkeeping System An Equal Opportunity University REQUEST FOR PROPOSAL (RFP) ATTENTION: This is not an order. Read all instructions, terms and conditions carefully. PROPOSAL NO.: Issue Date: UK-1357-14 RETURN ORIGINAL COPY OF PROPOSAL TO: 3/20/2014 UNIVERSITY OF KENTUCKY Environmental Health & Safety SoftwarePURCHASING DIVISION Based Research Facilities Inspection and 411 S LIMESTONE Title: Recordkeeping System ROOM 322 PETERSON SERVICE BLDG. Purchasing Officer: Joyce Holmberg LEXINGTON, KY 40506-0005 Phone: 859-257-9104 IMPORTANT: PROPOSALS MUST BE RECEIVED BY: April 17, 2014 @ 3 P.M. LEXINGTON, KY TIME. 1. NOTICE OF REQUIREMENTS The University’s General Terms and Conditions and Instructions to Bidders, viewable at www.uky.edu/Purchasing/terms.htm, apply to this RFP. When the RFP includes construction services, the University’s General Conditions for Construction and Instructions to Bidders, viewable at www.uky.edu/Purchasing/ccphome.htm, apply to the RFP. Contracts resulting from this RFP must be governed by and in accordance with the laws of the Commonwealth of Kentucky. Any agreement or collusion among offerors or prospective offerors, which restrains, tends to restrain, or is reasonably calculated to restrain competition by agreement to bid at a fixed price or to refrain from offering, or otherwise, is prohibited. Any person who violates any provisions of KRS 45A.325 shall be guilty of a felony and shall be punished...
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...following 1. Evaluate the company’s operational strengths and weakness based on the following: A. Horizontal analysis of financial statements involves comparison of a financial ratio, a benchmark, or a line item over a number of accounting periods. This method of analysis is also known as trend analysis. Horizontal analysis allows the assessment of relative changes in different items over time. It also indicates the behavior of revenues, expenses, and other line items of financial statements over the course of time. Horizontal analysis of financial statements can be performed on any of the item in the income statement, balance sheet For example, this analysis can be performed on revenues, cost of sales, expenses, assets, cash, equity and liabilities. It can also be performed on ratios such as earnings per share (EPS), price earnings ratio, dividend payout, and other similar ratio. Horizontal Analysis from the income statement: 1. Net Sales: There was an increase in sales from year six to year seven in the amount of 1,495,000 resulting in a 33.3% increase and a decrease in sale from year seven to year eight in the amount of 897,000 resulting in a 15% decrease in sale. In this analysis, the product of competition Bikes Inc. were good with the public from year 6 to year 7 and the increase in sale resulted to a 29.4% of an increase in pay to the executives in year 6 and 7 and on the other hand the sale decreased from year 7 to year 8 to a 15%. The decrease in sale resulted to a zero...
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...Within an economy, how would you describe an economic unit and is saving among economic units desirable? In providing an answer, explain why policymakers place such emphasis on increasing levels of saving, and the need to develop a savings culture in the Caribbean. Furthermore, what is the likely impact on an economy that has 98%-100% of its economic units as net savers? An economic unit is one that participates in the economy either through saving, investment or consumption. Anyone or institution can be an economic unit- government, household, schools,...etc. An increase in the level of savings serves to protect the balance of payments and to raise resources to finance investment in an expanding economy. In the Caribbean where there is a need for progress/growth, funds/savings are vital to finance this development. Although saving is greatly encouraged, there is still a need for borrowing so to stimulate economic activity. With an economy that has 98%-100% of its economic units as net savers, the circular flow of funds is disrupted and in fact this is not the most efficient manner to mobilize funds. Thus with little lending, the economy will not be able to realize its full productive capacity, there would be a reduction in the ability to shift consumption through time and of course there would be other matters such as the decline in employment, GDP,....etc. Financial intermediaries, such as commercial or retail banks, insurance companies and mutual funds, are only interested...
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