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Jet 2 Task 1

In: Business and Management

Submitted By deejaymanny
Words 8250
Pages 33
Competition Bikes Inc.
Summary Report
2014

Here is the Horizontal Analysis for years 6 and 7 for Competition Bikes Inc.

Income Statement

Sales Revenue: Net sales for Competition Bikes Inc. increase from $4,485,000 to $5,980,000, which was an increase of 33.3% for the year. This is a strength for the company since it shows that the demand for Competitions Bike’s product has increase over the year. This figure should also make stockholders very happy since the money the company makes helps determine the stock price. In this case it was a positive increase so it’s stock price should reflect a positive increase as well.

Cost of Goods Sold: Cost of Goods Sold (COGS) increased from $3,294,000 to $4,342,000, which was an increase of 31.8% for the year. The increase in COGS is not necessarily a bad thing (strength) for Competition bikes. The COGS should be in tandem with sales revenue since more products sold mean more goods to be produced. In this case the increase of COGS was slightly below the 33.3% increase in sales revenue which shows that some efficiency’s were made in the company.

Gross Profits: Gross Profits showed an increase of $447,000 ($1,638,000 - $1,191,000) which is to be expected since net sales increased for the year. With an increase in efficiency (as mentioned in COGS) this figure should be increase as well. Having a increase in Gross Profit also states that Competitions Bike's product is selling very well and/or they have limited availability and they are able to raise their sales price. This is a strength for the company.

Advertising
The horizontal analysis for years 6 and 7 also shows that Advertising expenses increased by 37.5%. An increase in advertising expenses is to be expected since an increase of Net Sales was also achieve. This (along with other selling expenses) could be the reason for an increase in sales

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