JET Task 1
Competition Bikes Inc.
Financial Analysis
Financial analysis is the process of evaluating a business’s liquidity, viability, stability, and profitability. It is typically used during audits, to determine if a business is suitable to be invested in, comparison to other companies, and to analyze overall financial status. The typical items reviewed during financial analysis are income statements, balance sheet, and cash flow statements. Once the documents have been reviewed a report is formed and presented to management for decision making purposes.
When performing financial analysis on Competition Bikes Inc. (CBI) one must start by reviewing the financial status of the internal control operations. This will be completed by reviewing the working capital, horizontal, vertical, ratio, and trend analysis. This will allow projection of any necessary budget limitations. By completing a yearly overhead versus profit projection of performance comparison a budget for materials on a month to month basis will be created.
Horizontal Analysis
Horizontal analysis is a procedure in fundamental analysis. It allows the analyst to compare line items on financial statements over a certain period of time. It is typically performed monthly, quarterly and annually. In the case of Competition Bikes Inc. the horizontal analysis reflects change between years six and seven and seven and eight. I will be doing the horizontal analysis by reviewing the company’s balance sheets and income statements.
Between years six and seven a strength in net sales is noted with an increased 33.3% totaling $1,495,000. The cost of goods from year six to seven was 31.82 %. Between years seven and eight the net sales of the CarbonLite was weak with a product decrease of 15% with a loss totaling $897,000. Yet again, between years six and seven a strength is noted in gross profit, increasing by 37.5%. The gross profit between years seven and eight decreased by 16.3% totaling $266,600. From this
Financial Analysis
Financial analysis is the process of evaluating a business’s liquidity, viability, stability, and profitability. It is typically used during audits, to determine if a business is suitable to be invested in, comparison to other companies, and to analyze overall financial status. The typical items reviewed during financial analysis are income statements, balance sheet, and cash flow statements. Once the documents have been reviewed a report is formed and presented to management for decision making purposes.
When performing financial analysis on Competition Bikes Inc. (CBI) one must start by reviewing the financial status of the internal control operations. This will be completed by reviewing the working capital, horizontal, vertical, ratio, and trend analysis. This will allow projection of any necessary budget limitations. By completing a yearly overhead versus profit projection of performance comparison a budget for materials on a month to month basis will be created.
Horizontal Analysis
Horizontal analysis is a procedure in fundamental analysis. It allows the analyst to compare line items on financial statements over a certain period of time. It is typically performed monthly, quarterly and annually. In the case of Competition Bikes Inc. the horizontal analysis reflects change between years six and seven and seven and eight. I will be doing the horizontal analysis by reviewing the company’s balance sheets and income statements.
Between years six and seven a strength in net sales is noted with an increased 33.3% totaling $1,495,000. The cost of goods from year six to seven was 31.82 %. Between years seven and eight the net sales of the CarbonLite was weak with a product decrease of 15% with a loss totaling $897,000. Yet again, between years six and seven a strength is noted in gross profit, increasing by 37.5%. The gross profit between years seven and eight decreased by 16.3% totaling $266,600. From this