...A budget is a comprehensive plan given in a quantitative term that directs where resources will be acquired and spent in a given period. It is a financial document which operates on income and expense basis. This document depends on the balancing of the monthly or yearly income and expenses. In this case, plan is used as the controller of what is going to happen while budget assess the performance of the required project. The meaning of setting a budget is to provide direction, improves efficiency, control finances and assign responsibilities to evaluate the business plans. Budgets are used by managers as s benchmark to measure up to the results of the definite operation. Budgetary areas that raise concern in the budget planning There were budgetary areas that raised an alarm in the budget planning of the Competition Bikes, Inc. one of the leading area was the forecasting of the transaction budget. The year 9 sale projection set at 3510. There a big is the difference in units of year 8 compared to year 7 with a decrease of 15% levels. Keeping in mind the current economic imbalance, the projected sales reading 3510 do not call for any support. This cannot happen because the professional rider’s sponsorship is at decline and is expected to undergo the same situation for another three years. These steps do not make sense at all and continuation of the support without the clear discussions and understanding on the way forward to increase sponsorship will no doubt lead to decline...
Words: 1345 - Pages: 6
...1. There are a few areas of concern with the Budget that Competition Bike, Inc. has displayed within their budget for year 9. The most prominent area of concern in is in the Revenue section of the budget. In the budget for year 9, Competition has included units sold to be 3510. This is a lofty prediction given that year 8 had seen such a big decline in that number. In year 8, Competition sold 3400 units, but the previous year had sold around 4000 units, a 15 % decline. The company is hoping for an upswing, but this may be too positive of an estimation. To go with that, Competition is only allowing for $984 more dollars in advertising for year 9. If they had budgeted maybe $2000-$3000 more to this category to get to where their advertising spending was in year 7 when they sold 4000 units, their budget of increased sales in year 9 would not be as suspect. In the Budgeted Income Statement, Competition Bikes has budgeted $1340038 for Selling, General, and Administrative Expenses. This is a little high as in year 7, when the highest number of units was sold, that category totaled $1322075. Sometimes this number is budgeted high to help show how well the company managed the budget, as they have built in extra that they know that they can beat. This is not in the best interest of the company, however, because the goal is not aggressively set, and there is no real push to beat the budgeted amount. The other concern with this area is that a lot of the key components in...
Words: 1118 - Pages: 5
...A1. Budget planning is in essence the process of forecasting and determining a company’s financial goals for both the long term and short term. Competition Bike, Inc. has come up with a budget schedule for year 9 operations. Based on its previous years and past financial numbers there are several areas of concern. First research and development is a concern because in the years that they invested more money in research and development it seemed sales where at its highest. Research and development is what keeps you ahead of the competition and what helps you keep your place in the market. By always having the latest and greatest in products and technology you will help secure and keep more customers and retain your spot in the niche market. For year 7, $98, 280 was spent on research and development and that is the year when the company made the most in sales. In year 8 the budget dropped by $16,000 to only $82284. This is the year were sales decreased and was stagnant. For year 9 the budget is only $85,232 not too much higher from the year before. This amount in my opinion is too low because if they expect to beat year 8 sales and make up for their losses they need to invest a little more in research and development. This will help in securing new products and new customers. Second Competition Bikes has accounts and notes payable at $229,003 for year 9. Although no one wants a lot of liabilities some are a good sign that business in doing well because there were suppliers to...
Words: 2148 - Pages: 9
...Horizontal analysis results Horizontal analysis compares the company’s finances over several years, with a base years for comparison. Competition Bikes uses year 6 as the base year, and a comparison of changes from year 6 to 7 and then with years 7 and 8. The strengths are mostly for year 6 to year 7. Net sales were $4,485,000 for year 6 and increased by $1,495,000 to $5,980,000 in year 7. Then from year 7 to 8 there is a decline in sales by $897,000 this decrease was the major weakness. The cost of goods in year 6 equaled $3,294,000 then increased in year 7 by 32.8% to $4,342,000. The Gross profits were up 37.5% in year 7 compared to year 6 for a growth of $447,000. The operating expenses increased due to the increase in sales from year 6 to 7. This is always a strength when you a company spend more because they are making more money. Advertising could have played a role in the increased sales. They spent the greatest amount of money on year 7, which was $32,760. There was a decreased in advertising expenses in year 8, by 16.3%. The company had fixed percent that they spent in sales commissions, distributions, network support, and transportation out, which all increased 33% from the 6th to 7th year and decreased 15% from the 7th to the 8th. The overall selling expenses were $299,220 in year 6 and increased to $397,960 (+33%) year 7 and then decreased to $338,748 (14.9%) year 8. Competition Bikes selling expenses were high for the 6th to the 7th year, but they managed to regain...
Words: 4327 - Pages: 18
...Financial Analysis Summary Report Task 1 Competition Bikes Incorporated Lisa A Castro, MSW Western Governors University Horizontal Analysis (A. 1. a) A horizontal analysis can be defined as “the study of percentage changes in comparative statements” (Charles T. Horngren, 2008, p. 746). It is useful in determining a company’s financial stability. This section will analyze Competition Bikes Incorporated’s (CBI) percentage changes from years 6 to 7 and then 7 to 8. The report will include an analysis of CBI’s comparative income statement and balance sheet. Between years 6 and 7 CBI’s Net Sales increased by 33.3% for a change of $1,495,000. The increase of 33% indicates strength for the company because it means that the company has become more profitable. This also indicates that demand for CBI’s product has increased and that their marketing strategies have been more successful. It is good news for the shareholders because more profits means more revenue. Between years 6 and 7 CBI’s Cost of Goods Sold increased by 31.8% for a change of $1,048,000. Even though the Cost of Good Sold increased significantly it is still less than the Net Sales increase of 33.3%. This resulted in a Gross Profit of 37.5% or $447,000. This indicates strength for CBI, as the management was able to control their costs to turn a profit on the increased sales. This is also a positive for the shareholders because increased profits mean more revenue for the shareholders. Between...
Words: 6540 - Pages: 27
...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...
Words: 8250 - Pages: 33
...Requirements for Task 1: A Prepare a summary report in which you do the following: 1) Evaluate the company’s operational strengths and weaknesses based on the following: a) Review the horizontal analysis, analyze the results, and discuss operational areas of concern. “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.” (Ready Ratios, 2014a) The sections below summarize the results of my horizontal analysis of Competition Bikes, Inc. (CB): Year 7 to Year 8 CB suffered a decrease in Net Sales Revenue of 15% from Year 7 to Year 8, but the course materials explained this as a result of a decline in the overall economy. This is a reasonable explanation and may very well indicate that CB management’s actions or inactions are not to blame for decline. It is encouraging that percentage decreases in Cost of Goods Sold and Selling Expenses, 14.5% and 14.9%, respectively, approximated the 15% decrease in Net Sales indicating no significant change in marginal cost of production and sales. That total General and Administrative Expenses increased by 1.2% is not any cause for...
Words: 10434 - Pages: 42
...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...
Words: 4532 - Pages: 19
...JET2 – Task 4 Financial Statement Analysis Managing Internal Cost & Controlling Finances Summary Report In response to a request from the Vice President of Competition Bikes for an analysis and recommendation regarding Activity Base Costing, as well as a request for a break-even analysis with projections of the company’s target profit, I have developed the following report. 1. Costing Method Evaluation Traditional Costing and Activity Based Costing (ABC) are the two systems we will evaluate in relation to Competition Bikes’ operations. To do so, we will need to look at the advantages and disadvantages of both systems. Costing systems are used to help predict the profitability of a product and help establish the cost of a product correlated to the income it generates. Traditional costing allocates overhead according to the amount of a particular cost driver, for example, how many direct labor hours are required to manufacture a product, while activity based costing looks at each activity and assigns a cost to it. Traditional costing separates costs into direct and indirect categories. The costs of labor or of raw materials would be examples of direct costs. Then, traditional costing divides the total cost of a product by the direct labor cost. This gives us the estimated cost of the product per item. However, increasingly in today’s business environment, the proportion of direct costs have fallen in relation to the proportion...
Words: 3145 - Pages: 13
...Course Project – Part I Task 1: Assessing loan options for Air Jet Best Parts, Inc. The company needs to finance $8,000,000 for a new factory in Mexico. The funds will be obtained through a commercial loan and by issuing corporate bonds. Here is some of the information regarding the APRs offered by two well-known commercial banks. Bank APR Number of Times Compounded National First Prime Rate + 6.75% Semiannually Regions Best 13.17 Monthly 1. Assuming that Air Jet Parts, Inc. is considering loans from National First and Regions Best, what are the EARs for these two banks? Hint for National Bank: Go to the St. Louis Federal Reserve Board’s website (http://research.stlouisfed.org/fred2/). Select “Interest Rates” and then “Prime Bank Loan Rate”. Use the latest MPRIME. Show your calculations. (25 pts.) Bank Prime Loan Rate as of Jan 26, 2013 – 3.25% according to the Federal Reserve Bank of St. Louis. National First - EAR EAR = (1+(Prime Rate +6.75%)/2)^2-1 EAR = (1+(3.25% + 6.75%)/2)^2–1 EAR = (1+.10/2)^2–1 EAR = (1.05)^2-1 EAR = 1.1025-1 EAR = .1025 EAR = 10.25% Regions Best - EAR EAR = (1+13.17%/12)^12-1 EAR = (1+0.010975)^12-1 EAR = (1.010975)^12-1 EAR = 1.13995-1 EAR = 0.13995 EAR = 13.995% EAR = 14% 2. Based on your calculations above, which of the two banks would you recommend and why? Explain your rationale. (25 pts.) I would suggest that Jet Air go with National First to get their loan. I say this because of the lower...
Words: 901 - Pages: 4
... | | | |Qualification |Unit number and title | |BTEC Level 3 Extended Diploma/ Subsidiary Diploma in Business |Unit 2: Business Resources | |Assignment no and title | Assignment 1 : Know how human resources are managed | |Criteria reference|To achieve the criteria the evidence must show that | | |Task No | | |the student is able to: | | | | |P1 | | | |Task 1 | | |Describe the recruitment...
Words: 596 - Pages: 3
...[Company name] [Company address] Marrketing principles Contents Introduction 2 Learning Outcome 01 2 Task 1 2 Task 2 4 Learning Outcome 02 5 Task 3 5 Task 4 10 Task 5 12 Learning Outcome 03 12 Task 6 12 Task 7 13 References: 13 Introduction British Airways (BA) is the banner bearer aerial shuttle of the United Kingdom and its biggest carrier focused around armada size, universal flights and global ends. At the point when measured by travelers conveyed it is second-biggest, behind Buisness jet. The aerial shuttle is situated in Waterside close to its primary center point at London Heathrow Airport. A British Airways Board was built by the United Kingdom government in 1972 to deal with the two nationalized aerial shuttle companies, British Overseas Airways Corporation and British European Airways, and two littler, provincial carriers, Cambrian Airways, from Cardiff, and Northeast Airlines, from Newcastle upon Tyne. On 31 March 1974, every one of the four organizations was consolidated to structure British Airways. After very nearly 13 years as a state organization, British Airways was privatized in February 1987 as a feature of a more extensive privatization arrange by the Conservative government. The transporter soon stretched with the securing of British Caledonian in 1987, took after by Dan-Air in 1992 and British Midland International in 2012. British Airways is an establishing part of the one world aerial shuttle union, alongside American...
Words: 6241 - Pages: 25
...in Alberta, Canada. Kelly's father was a successful larvyer in Calgary, and her mother was a high school English teacher. Kelly had an older sister, Laurel, 27 , who had just passed the bar exam and was working fbr a corporate law firm in Edmonton. Kelly had studied Japanese in high school and in university and spoke and wrote the language quite well. When she was 15 years oid, Kelly spent tbur months in Japan on a school exchange. She had enjoyed the time she spent there and ahvays planned to return one day. Upon graduating tiom high school. Kelly lvent to the University of Alberta, in Ednonton, to stucly nlarragement. During her final year at the universitv, Kelly heard some of her friends talking about the Japan Exchange and Teaching (JET) Program. She rvas told ihat it rvas quite easy to get accepte(l-all an applicant needed was a university deglee and an interest in Japanand that it rvould be a...
Words: 2608 - Pages: 11
...Task Background: Suppose you are developing a statistical database in which information about professional football teams and records are stored. Consider the following 2 sets of data that list football teams and quarterbacks: D = {Jets, Giants, Cowboys, 49’ers, Patriots, Rams, Chiefs} Q = {Tom Brady, Joe Namath, Troy Aikman, Joe Montana, Eli Manning} NOTE: (You can also use http://www.pro-football-reference.com to find this information, but here it is as well :) The following list gives you the relationships (mapping) between team and QB. * Jets – Joe Namath * Giants – Eli Manning * Cowboys – Troy Aikman * 49’ers – Joe Montana * Patriots – Tom Brady * Rams – Joe Namath * Chiefs – Joe Montana 1. Using D as the domain and Q as the range, show the relation between the 2 sets, with the correspondences based on which players are on which team. Show the relation in the following forms: Set of ordered pairs (20 points) Directional graph (like the pictures draw in class in our live chats – see HINT below). (20 points) The ordered pairs when D is the domain are: {(Jets,Joe Namath),(Giants,Eli Manning),(Cowboys, Troy Aikman),(49ers,Joe Montana),(Patriots,Tom Brady),(Rams,Joe Namath),(Chiefs, Joe Montana)} 2. Is the relation a function? Explain. (10 points) This is a function, because every element (Quarterback) of the domain is mapped to exactly one unique element (Team) of the range. So with the one to one relation of player to team...
Words: 580 - Pages: 3
...Task 1: Assess Loan Options 1. National First Bank Prime Rate + 6.75%, Compounded Semiannually [1+ (6.75+3.25) /2]^2-1 = .1025 a EAR of 10.25% Regions Best [1+ ( .1317/12)^12-1 = .014 a EAR of 14 % 2. After calculating the EAR for both banks, I would recommend National First Bank because its EAR is 10.25% which is lower than Regions Best EAR of 14%. The best choice for Air Jet Best Parts Inc., should be the lower EAR of 10.25%. 3. Air Jet Best Parts Inc $6,950,000 loan with APR of 8.6% for 5 years. Monthly 6,950,000*8.6%/ 5%= $597,700/5 = $119,540/60 =$1992.33 monthly I would have to disagree with this move. National First Bank calculation with a 6.75% rate would yield a smaller monthly payment with a lower interest rate, which would save the company money. Task 2: Evaluate Competitors Stock 1. Lockheed Martin Price: 85.21 Dividend: 4.00 Rate of Return: 4*[(1+.05)/85.21+.05] =.1204=12.04% 2. Current Share Price 12.04% [1.50*(1+.01)]/ (.1204-.01) = $13.72 3. Preferred Stock Price 1.50/.1204= $12.46 In Review of the two Prices, I would have to say that this is a good thing. A company current share price should be over its Preferred Price. Meaning that stock pricing is better currently than what the pricing was projected to be. 4. Paying Dividends decreases the value of a stock. The amount of a dividend is subtracted from the Stock Price. In other words, subtracting from the stock price yields a negative change. Adding to the stock...
Words: 345 - Pages: 2
