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Financial Analysis Task1

In: Business and Management

Submitted By tracop
Words 5651
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COMPETITIVE BIKES, INC.
INTRODUCTION
The Financial Analysis of Competitive Bikes Inc. involves a complete assessment of the liquidity, profitability, competitiveness, and stability of the business. These reports will be using both the income statements and balance sheet provided by the business. Financial statement information is used by both internal and external users including creditors, investors, managers, and executives to make business decisions (Edmonds et al., 2010, p.100) The main objective of Competitive Bikes Inc. financial statement analysis is the examination of the firm’s financial position and returns in relation to risk.
In this report, the Horizontal Analysis will show changes in the amounts of corresponding financial statements over a period of three years, which are year six, seven, and eight.
Secondly, the Vertical Analysis which measures assets, liabilities, and equities will be used to analyse the income statement by exploring the proportion of the income statement variables to the total sales, analysing the financial performance of the company.
Thirdly, Trend Analysis will be used to analyse the pattern in the financial performance of the company over a period of time.
Lastly, Ratio Analysis as well as its Working Capital will be used in reviewing the profit margin allowances for projecting any necessary budget restraints on overhead costs and sales potential.
A1a. HORIZONTAL ANALYSIS
Competition Bikes Inc. Year 6 financial report will be used as the base for comparison with the other years as documented in the report. The changes in dollars and percentage can be an increase or a decrease which justifies the strength or a weakness.
Horizontal Analysis Net Sales | Year 64,485,000 | Year 75,980,000 | ($) Change1,495,000 | % Inc (Dec)33.3% | Net Sales | Year 75,980,000 | Year 85,083,000 | ($) Change(897,000) | % Inc (Dec)-15.0% |
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