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Financial Analysis - Task 5 Wgu

In: Business and Management

Submitted By sladed
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Custom Snowboards, Inc.
Financial Analysis – Task 5
Slade Dietz
Western Governors University

Custom Snowboards, Inc. CFO Presentation Due to the growth of total sales and anticipated future growth of sales from Europe, Custom Snowboards, Inc. is considering expanding into the European market.
Key points from the company’s income statement, the financial risks and the ability to repay any loan taken must all be considered. The following will summarize the current financial statements of Custom Snowboards, Inc.
Key Points Six key points (line items) that could impact the banks decision for loan approval for Custom Snowboards, Inc. for the European expansion are:
Profitability:
* Net Sales – Net sales rose by .49% ($32,000) from Year 12 to Year 13; however, the company’s net sales declined in Year 14 by 3.40% (-$156,800) from Year 13. The Cost of Goods Sold (COGS) remained constant at 69.6% of the Net Sales in each year. This sales data is important to the banker due to the fact that, even with the decline in sales, the trend analysis shows the company does have an expectation of overall growth in net sales of 3.7% in Year 17 from Year 14. These higher sales will have a direct impact in driving profitability. * Operating Income – The Company did a good job in containing its selling expenses keeping them proportional to the net sales; however, they did not do a good job in managing the General and Admin Expenses from Year 13 to Year 14. Specifically with the line items of administrative salaries, executive compensation and other general & admin expenses.
With both net sales and gross profit declining by 3.40% in Year 14 from Year 13, administrative salaries increased by 13.64 %, executive compensation increased by 10.26% and other general & admin expenses increased by 7.59%. In turn, the significant increases of these three line items were the…...

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