Competition Bikes Task 1
This report will provide a financial analysis and evaluation of Competition Bikes, Inc financial statements over a select range of financial years reported by the company. The financial analysis will assist the company in identifying strengths and weaknesses, with recommendations in areas of improvement to strengthen its financial position in hopes to induce overall efficiency of operations.
Horizontal analysis results
The horizontal analysis is a method used to analyze changes in the company’s financial health between years in values of dollars and percentages using data from the balance sheet and income statement. In the horizontal analysis a base year is set and then other years are compared to the base year. The horizontal analysis will be used to assess Competition Bikes actual financial operating performance based on the time period between years 6 through 8, with year 6 set as the base year. Starting with an analysis between year 6 and year 7, we look at the horizontal financial changes to determine actual performance by the percentages. Net sales in years 6 and 7 reflect a change of $1,495,000 at a 33% increase change. This change is positive which translates into higher sales which also mean the operating performance was good for the company and customers really liked the products. The cost of goods sold reflects a change of $1,048,000 at a 31% increase change. This percentage is financial strength for company again which means the customer liked the products. This percentage should remain lower than the net sales, and the percentage reflect an added strength for the company because this percentage is lower than net sales, so here the Competition Bikes has control over the cost of making the Bikes to increase revenue. In the same years (6 and 7) the horizontal comparison ratio for gross profits reflected a change of $447,000 which is a positive increase of 37.5%. Therefore, 37.5% of each dollar from sales was retained after the cost of
Horizontal analysis results
The horizontal analysis is a method used to analyze changes in the company’s financial health between years in values of dollars and percentages using data from the balance sheet and income statement. In the horizontal analysis a base year is set and then other years are compared to the base year. The horizontal analysis will be used to assess Competition Bikes actual financial operating performance based on the time period between years 6 through 8, with year 6 set as the base year. Starting with an analysis between year 6 and year 7, we look at the horizontal financial changes to determine actual performance by the percentages. Net sales in years 6 and 7 reflect a change of $1,495,000 at a 33% increase change. This change is positive which translates into higher sales which also mean the operating performance was good for the company and customers really liked the products. The cost of goods sold reflects a change of $1,048,000 at a 31% increase change. This percentage is financial strength for company again which means the customer liked the products. This percentage should remain lower than the net sales, and the percentage reflect an added strength for the company because this percentage is lower than net sales, so here the Competition Bikes has control over the cost of making the Bikes to increase revenue. In the same years (6 and 7) the horizontal comparison ratio for gross profits reflected a change of $447,000 which is a positive increase of 37.5%. Therefore, 37.5% of each dollar from sales was retained after the cost of
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