...Custom Snowboards CFO Report Custom Snowboards, Inc. (CS) is a world-renowned company that has continued to grow over the last four years since being traded publically. With a center for operations in Minneapolis, and small warehouses and administrative offices in the Canadian and European markets, the potential for growth is evident in the company’s profitability, liquidity and solvency. There are risks associated with the company expansion, but those can be mitigated. With strong ratio analysis, the company is ready to receive and put to use the loan from the bank for $1,000,000. A1: Key Points The key points in the income statements include increasing gross profits, decreasing net earnings, increasing total operating expenses, and decreasing operating income. The key points in the balance sheets are changes to cash and cash equivalents, short-term investments, increasing accounts and accounts payable, decreasing total long-term liabilities, and increasing total liabilities and equity. All of these are important because they show the company’s profitability, liquidity, and solvency. Gross profits were $1,984,500 in year 12, $2,048,200 in year 13, and continued to increase to $2,087,400 by year 14. This increase in gross profits is due to the increased net sales over the three years by an additional $338,100 from year 12 to 14. The company saw a 3.21% increase in sales from year 12 to 13, and another 1.91% increase from year 13 to 14. Costs of goods sold, has remained...
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...With the sales growth and expected continual growth in Europe, Custom Snowboards, Inc. is considering an expansion into Europe. The company has two options for expansions; to build a new manufacturing facility or to merge/acquire the operations of an already established European manufacturer called European Snow Fun. In order for an acquisition to work, the company would need a loan from the bank for one million dollars. A1. Looking at the financial aspect of the company, there are a few key points that could affect a bank officer’s decision. The bank officer would need to figure in on how the company would be able to pay the debt back. The vertical analysis shown in the financial statement shows how the base amount in relation to the particular items. There are a few main points to gather from the vertical analysis. The first one we will take a look at is the net sales of every year. In year 2012, the net sale was $6,601,000 with a gross profit of $2,009,000. In year 13, we saw an increase to $6,633,200 in net sales with a gross profit of $2,018,800. However, we see some concern when taking a look at year 14. The sales declined by $225,400 compared to year 13, while gross profits took only a slight decline of $68,600. It seems that this was due to the fact that they were cutting back on operating expenses compared to the previous years. In year 12, the total selling expense was $779,000, in year 13 it was $782,800, and in year 14 they dropped it down to $756,200. In...
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...Task 5 CFO Presentation A1. Key Points The profitability of the Custom Snowboards Inc can be seen in the following areas: net sales, gross profits and net earnings. Net sales increased between years 12 and 13 by 3.21% and again between years 13 and 14 by 1.91%, as shown in the horizontal analysis line 10. The company has continued to grow its net sales for the past three years. Custom Snowboards Inc has the ability to continue increasing net sales. Gross profits have remained constant at 30.4%, as shown on the vertical analysis line 12, between years 12, 13, and 14. This demonstrates that the company has kept the margin consistent each year with the cost of goods sold which can be seen in the horizontal analysis lines 11 and 12. These two lines show that between years 12 and 13, the cost of goods sold increased at 3.21%, the same rate that the gross profit increased. And again between yeas 13 and 14, the gross profit increased the same as the cost of goods sold at 1.9%. Custom Snowboards Inc has not allowed the cost of overhead to rise faster than the sales increase. The net earnings of Custom Snowboards Inc have decreased over the last three years. Line 41 of the horizontal analysis shows a 14.42% decrease between years 12 and 13, and a 27.79% decrease between years 13 and 14. The decreases in net earnings have been mainly due to the increases in administrative salaries and executive compensations. As the company has grown, so has the need compensate administrative...
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...JET2 TASK 2 1 JET 2 TASK 2: Financial Analysis Theo Adams Western Governors University MBA Program JET2 TASK 2 2 (A1) Budget Concerns Investopedia defines Budget as an "estimation of the expenses and revenues over a specific future period of time. Budgets can be made for a group of people, family, person, country, business, government, organization or anything else that makes or spend money. The budget is a micro economic concept that shows the trade-offs made when one good is exchange for another." When looking at the year 9 budget for CB first thing that jumped out at me was the sales goal of 3510 is a 5247450. This is my first immediate concern considering that the storyline has clearly stated it is a down market due to the reductions in monies for sponsored professional riders from their sponsors. This is the main sources sales for the Carbonlite model from CB. The professional riders not having the same resources they had in year 7 when sales went to 4000 from the 3000 sold in year 6. which meant CB's revenue went from 4485000 in year 6 to 5980000 in year 7. This 33.3% jump was followed by 15% drop from 4000 units sold in year 7 to 3400 units sold in year 8. Again this drop was due to the cut in sponsorship money for the professional riders which ended up reflecting at the drop in revenue as well from year 7 to 8 of 5980000 to 4485000. These facts do not seem to warrant an increase in sales from 3400 units to 3510 units and an Increased Revenue to 5247450. Even...
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...Running head: JET2 TASK 2 1 JET2 Task 2 Budgeting Bonnie Wilson Western Governors University JET2 TASK 2 A.1. Operational Strengths and Weaknesses A.1. Budget Concerns 2 Revenue from sales is budgeted too high. In year 8 Competition Bikes experienced a 15% decline in sales revenue, and yet for year 9, they have budgeted for a 3.2% increase. This is likely to be an overly optimistic projection and relies heavily on economic factors outside of the company’s control. Inaccuracy in this projection will have a negative impact on the rest of the budget. Advertising is budgeted too low. The year 9 budgeted amount of $28,412 represents a 3.5% increase over year 8, but it is still almost 20% shy of the amount spent on advertising in year 7 when sales were at an all time high. If the company is to have any hope of realizing its revenue projection, then the amount budgeted for advertising is too low. Executive compensation is budgeted too high. In year 7 executive compensation increased by $50,000 dollars. This made sense then because sales had increased by 33%. However, holding that number steady in year 8 when there was a 15% decrease, and again in year 9 when even a 3.2% increase is optimistic, is not a financially sound budgeting decision. Research and development is budgeted too low. The budgeted amount for year 9 is $85,237. While this represents the same 1.6% of sales revenue that Competition Bikes consistently allots, research and development is an investment in the...
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...Introduction: In this task you will prepare a presentation for the chief financial officer (CFO) to present to a bank vice president. The bank vice president will decide if the bank will approve a $1,000,000 funding request for the European expansion of Custom Snowboards Inc. currently under consideration. The bank has not confirmed it is willing to consider a $1,000,000 loan. The bank will make its assessment of the risk associated with the loan after your presentation. You will prepare another presentation to present directly to the chief executive officer (CEO) of Custom Snowboards Inc. The presentation will include a recommendation on how to proceed with the expansion plans. The presentations can assume the form of a presentation or a report. You may combine the two or submit them separately. Be sure to enter your first initial and last name on the first worksheet in Custom Snowboards, Inc. Financial Data excel document. Task: Note: Be sure to submit a copy of your Excel workbook when submitting your JET2 Task 5 work. When you enter your first initial and last name at the top of the Income Statement you are given a dataset that is based on your name. The evaluator will need a copy of your data to ensure correct evaluation. Note: Your presentations may be in a variety of formats (e.g., report, multimedia presentation). A. Create a presentation or report for the chief financial officer in which you do the following: 1. Summarize the key points of...
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...Introduction: In this task you will prepare a presentation for the chief financial officer (CFO) to present to a bank vice president. The bank vice president will decide if the bank will approve a $1,000,000 funding request for the European expansion of Custom Snowboards Inc. currently under consideration. The bank has not confirmed it is willing to consider a $1,000,000 loan. The bank will make its assessment of the risk associated with the loan after your presentation. You will prepare another presentation to present directly to the chief executive officer (CEO) of Custom Snowboards Inc. The presentation will include a recommendation on how to proceed with the expansion plans. The presentations can assume the form of a presentation or a report. You may combine the two or submit them separately. Be sure to enter your first initial and last name on the first worksheet in Custom Snowboards, Inc. Financial Data excel document. Task: Note: Be sure to submit a copy of your Excel workbook when submitting your JET2 Task 5 work. When you enter your first initial and last name at the top of the Income Statement you are given a dataset that is based on your name. The evaluator will need a copy of your data to ensure correct evaluation. Note: Your presentations may be in a variety of formats (e.g., report, multimedia presentation). A. Create a presentation or report for the chief financial officer in which you do the following: 1. Summarize the key points...
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...JET2 - Financial Analysis - Task 4 JET2 – Task 4 A1. Costing Method Costing is used in business accounting strategies as a way of determining cost of manufacturing a product in relation to the revenue generated by that product. Costing systems determine the overhead of production and then allocate those overhead costs to a business’s product. There are two common methods for allocating these indirect costs to products, traditional costing and activity based costing. Both of these methods assess overhead costs and then attach these costs to products based on certain cost drivers, “a factor that causes cost to incur, such as machine hours, direct labor hours and direct material hours (Johnson 2014).” The first of these methods is Traditional Costing. This costing method drops all overhead costs into one bucket and then disperses them across three drivers, units produced, labor, and machine hours. Although this method works well for lines that are similar and consistent, one of its drawbacks is that this method does not account for customization requirements and overall complexity of the lines. So the company ends up allocating the same cost drivers across all production lines. The second method is Activity Based Costing. Activity based costing on the other hand, utilizes multiple cost pools as it relates to overhead costs based on resources used. Overall, this is a better cost system methodology for the company as it allows for the customization and specialty line...
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...JET2 Financial Analysis Task 4 WGU By Kat-Johnson | Studymode.com Competition Bikes Inc. Storyline Managing Capital & Financial Assets 04/12/2014 WGU JET2 Financial Analysis Task 4 - PASSED To: Vice President The following is a summary report to recommend whether Competition Bikes should change its traditional costing method to activity based costing, and an analysis of the breakeven point with regards to sales units and dollars for both CarbonLite and Titanium bikes. It also discusses the impacts to the breakeven point. The cost-volume-profit evaluation and the traditional vs activity based costing method overhead analysis were used for the review and analysis. Traditional Based Costing vs Activity Based Costing Traditional Based Costing Method (TBC). TBC uses one rate, the overall cost of production, to estimate costs based on the revenue production created. Unlike ABC, manufacturing costs in TBC are only assigned to sold merchandises and do not account for nonmanufacturing costs such as administrative costs. This method is general not as accurate as ABC as it does not account for costs specifics to the level of products. For Competition Bikes, the company can see its manufacturing overhead is $239,020 for the Titanium bikes, and $232,380 for the CarbonLite bikes for a total of $471,400 in overhead costs. This means the unit cost for each is $713 for Titanium bikes, and $1359 for the CarbonLite bikes. Activity Based Costing Method (ABC). ABC determines and...
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...| Competition Bikes: Task 1 | | Jamila Mitchell | | Competition Bikes: Task 1 | | Jamila Mitchell | Western Governors University JET2 Financial Analysis Western Governors University JET2 Financial Analysis Competition Bikes: Task 1 Jamila Mitchell Operational Strengths and Weaknesses Horizontal Analysis To evaluate changes in financial statements, a horizontal analysis is necessary so the company can determine whether there is positive or negative growth over time. The changes in percentages is calculated and decisions are made according to the increases or declines. Competition Bikes: Year 7 Overall, year seven was a successful year for the company based on the horizontal analysis of the following financial aspects. Revenue Net sales went from $4,485,000 in year six to $5,980,000 in year seven, an increase of $1,495,000 or a 33.3% increase. The cost of goods sold in year six was $3,294,000, which increased to $4,342,000. This increase of $1,048,000, or 31.8%, was expected considering the increase in net sales. The cost of goods sold remained less than net sales, so this is a strength for the company. While both net sales and cost of goods sold increased, there was still a balance between the two. This shows that the company sold more products at a lower cost, which also attributed to the 37.5% increase in growth profits. Total Selling Expenses Total selling expenses increased from $299,220 in year six to $397,960 in year seven. This was...
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...JET2 Financial Analysis Task 1 Competition Bikes, Inc. Submitted by: Michelle Beacham Competition Bikes, Inc. is a manufacturer of bicycles for professional and other highly accomplished riders. The bicycle produced is a light weight, shaft driven bicycle that is custom made to fit each cyclist. It has been extremely popular among professional riders; however, recently sponsors have reduced funding to the riders causing a decline in sales volumes. This summary will be evaluating the strengths and weaknesses of the Competition Bikes, Inc., analyzing the working capital of the company, evaluating the internal controls, and Competition Bikes’ compliance with the Sarbanes-Oxley Act. Evaluation of the strengths and weaknesses The first evaluation of strengths and weaknesses of Competition Bikes, Inc. will be a horizontal analysis of the income statement and balance sheet. A horizontal analysis is a comparison of financial information across a particular time period. A comparison of the periods is completed based on a historical base period. For instance, we could compare sales for the current year as compared to the prior year. Each significant variance is investigated to determine the cause of the fluctuation (Accounting Tools, 2015). Gross profit is the difference between “Net Sales” and “Cost of Goods Sold”. Gross profit is up 37.5% in year 6 with a significant decline of 16.3% in year 7. The decline in year 7 is directly attributable to the decline in sales...
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...EXECUTIVE SUMMARY The purpose of the following report is to evaluate Competition Bike Inc. operations and the possible direction of the company in the next few years. Figures were obtained from comparative balance sheets and profit and loss statements from the relevant years as well as additional information that were forwarded for review. This information enabled the development of percentage and ratio analysis, which was then used to create the report. Administrative expenses were indirectly related to generating income. Managers usually have more control over administrative expenses than any other cost. In FY8 when net sales were down, managers had the ability to reduce expenses in this area more easily than in other categories. Administrative costs include professional services, annual meetings, meetings and travel, office supplies, and telephone and market information. The investigation for FY6, FY7 and FY8 revealed that the company had improved its position compared to previous years. The profitability of the company was significantly better while the liquidity had remained reasonably steady. The solvency of the company had increased, not affecting the long-term obligations of the business. Horizontal Analysis Income Statement Competition Bike sales and profitability has varied widely over the last three years. Net sales between FY6 and FY7 increased to 33% and subsequently falling to 15% between FY7 and FY8. The largest growth rate over the 3 years occurred in...
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...Jet2 task 3 Competition Bikes, Inc.Financial AnalysisJET2 Task 3 Introduction Competition Bikes, Incorporated (CBI) has decided to weigh their options for expansion into Canada by either acquiring or merging with Canadian Bikes, Inc. This report will discuss the proposed expansion and make recommendations based on the company's capital structure. Capital structure can be described as how a business finances its assets. There are two main types of capital: Equity and debt. Capital structure is usually a mix of debt, preferred stock, and common stock that the company can use for expansion and to remain financially healthy. The key is to choose the right mix in order to maximize shareholder return. A1. Capital Structure Capital structure is generally defined as how a company finances its assets. It is measured as a percentage of debt and equity (common and preferred stock). Potential investors tend to look positively on a company that has more equity and less debt. The best capital structure approach for CBI to take is to implement the 50% Preferred and 50% Common Stock scenario. This alternative provides the best overall way to improve CBI's financial position with strong capital structure while maximizing shareholder return. A1a. A review of Canadian Bikes data over five years indicates consistently increased earnings before interest and taxes (EBIT), increased net profit, and increased shareholder returns (EPS). Offering the 50% preferred and 50% common stock...
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...JET2-Task1 A.1.a Horizontal analysis Horizontal analysis is essentially an analysis on the trend of the financials of the company. It shows changes in the amounts of the amounts over a period of time. In the financial statement provided, the horizontal analysis is between years six and seven, and years seven and eight; respectively. When analyzing the income statement provided with the task, several strengths and weaknesses are very apparent. They will be broken down individually and analyzed separately. Horizontal analysis is calculated by using the formula below ("Horizontal Analysis," n.d.) Income Statement Revenue: Net sales between years 6 and 7 demonstrate a 33.3% increase or an increase in approximately $1.5 million. This is a strength because there were positive sales during this time frame. Positive sales are always a positive finding in business. However, sales between years 7 and 8 demonstrate a decrease in net sales of -15% or $897,000. This is a weakness due to the overall sales being down. Cost of Goods Sold between years 6 and 7 demonstrates an increase of 31.8% or $1,048,000. The costs associated with manufacturing goods are always going to be a big expense. While the cost associated may appear to be a weakness for the company, it actually demonstrates strength for the company. The reason being is the percent change in sales. It closely represents the increase in sales during the same period. If the sales number did not adequately correlate...
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...Financial Analysis – JET2 Task 1 Report for Competition Bikes, Inc. Competition Bikes, Inc was formed in 2001 and manufactures professional and performance bicycles used in a variety of racing events for expert riders. Bicycles produced by this company are ridden by 60% of all race winners and word of mouth has been their main marketing strategy. Competition Bikes is also the first company to use drive shaft technology in their bikes, which sets them apart from their competitors. A horizontal, vertical, trend and ratio analysis of Competition Bikes has been completed and is summarized in the review below. HORIZONTAL, VERTICAL, & TREND ANALYSIS Beginning with a comparison between year 6 and 7, sales in units rose from 3000 to 4000 which was a 33.3% increase in the number of units sold and is reflected in total Net Sales which rose from $4,485,000 to $5,980,000. Consistent with this same increase of 33.3% were sales commissions, distribution network support, transportation out costs, and total selling expenses. The total cost of goods sold increased 31.8%; this helped the company produce their product at a lower cost adding to their overall profit margin. The gross profit margin from year 6 to year 7 increased 37.5%. The company increased both their advertising and research and development 37.5% between year 6 and 7, this can strengthen their market base and aide in the development of new or improved products. Administrative salaries increased 21.4% and Executive...
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