Competition Bikes Inc.

Horizontal Analysis

Competition Bikes Inc. net sales when matched to the previous year were substantially lower. In essence, the current economic changes attributed to this situation. However, the company anticipates per unit transactions will go into a period of growth over three subsequent years, and it will thus continue being profitable. In spite of the noted low sales numbers, the net price of product sold when matched to net sales; stayed at seventy percent. This validates that the raw material values and labor inputs have remained consistent. In addition, the price for advertising was lower by 16.3 percent, which was due to the lower sales data. The first expenses that are often affected are advertising and marketing budgets when the economy takes a downturn. The company expenditures have been pretty continual from the operational beginnings to the present time. One such expenditure is the utilities, 11.1 percent is allocated for energy, which is directly related to an increase utility rates. The next expenditure is administration cost, which encompass about 7.6 percent of expenses in relation to the fifteen percent reduction in sales. In correlation, there is a decrease in operating revenue that is in correlation to the sales numbers, which now stands at fifteen percent. The organization pays utilities, salaries and fixed expenses regardless of sales or the lack of sales. This disrupts the organizations monies in correlation to sales, which have been continually declining. The organizations labor data, conversely, remained constant. Decline in the production labor force or employee attrition would be supportive in preventing the predominant trends. The reduction in operating revenue considerably affected net income, which resulted in an 81.6 percent net income decline in years 2007 and 2008. The dollar amount in 2007