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Jet Task 1

In: Business and Management

Submitted By ohara31
Words 3522
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A.1 Throughout this paper, the “Competition Bikes Inc. Storyline” case study will be used to prepare a summary report based on the evaluation of the company’s operations.
The objective will be to evaluate the company’s operational strengths and weaknesses based on the following:
a. Horizontal analysis results
b. Vertical analysis results
c. Trend analysis results
d. Ratio analysis results
As defined by Business Dictionary (2014) Horizontal Analysis is ” Comparative study of a balance sheet or income statement for two or more accounting periods, to compute both total and relative variances for each line item.” Competition Bikes Inc. will be analyzed in each area in regards to years 6, 7, & 8. Analyzing the strengths and weakness of the operations throughout the discussed years will take place throughout the assignment. The Strengths of Competition Bikes Inc. will first be analyzed and discussed. Firstly, Revenue will be analyzed for years 6 & 7, in which there are strengths concerning Net Sales. From year 6 to 7, Net Sales increased by $1,495,000, a 33.3% increase for Competition Bikes Inc. Year 7 was a much stronger year concerning Net Sales for Competition Bikes Inc., compared to year 6. A second strength within the Horizontal Analysis is the Cost of Goods Sold for year 7, compared to the previous year. The COGS increased to $1,048,000, which is a 31.8% increase. This is significant due to the fact that the Net Sales enjoyed a much larger increase compared to the Cost of Goods Sold, which in turn displayed the ability of Competition Bikes Inc. to sell the manufactured bikes at a lower cost to the company, in turn adding to the bottom line. The final strength within the Horizontal Analysis is the Gross Profit from years 6 to 7. There was a financial increase in Gross Profit of $447,000 at a 37.5% increase. It was overall a very productive year for

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