Managing Capital & Financial Assets
WGU JET2 Financial Analysis
Task 5, Part II - PASSED To: Chief Executive Officer (CEO) of Custom Snowboards Inc.
Subject: Report of historical data and recommendation on how to proceed with expansion plans to Europe.
European Expansion Historical Analysis
To make a decision about expansion to Europe, we must first analyze past performance as an indicator about future performance. A historical analysis was completed on the company’s past balance sheets.
Custom Snowboards Inc. has had increased net sales in the past three years. Net sales went up .23% in year 13 and .93% in year 14. Cost of goods sold (consisting of direct material, labor, and overhead) and in relation Gross Profit, also increased by the same percentages. Using the historical data, we use the trend analysis to determine what sales will be like in future years. The company’s trend analysis shows this increase in net sales and gross profit will continue well into year 17. Using base year 12, historical data shows an increase to 100.2% in year 13 and another .7% increase to 100.9% in year 14. Then to further review the upcoming year’s predictions, Custom Snowboards uses year 14 as the base year at $6,955,200. Year 15 increases to $7,163,856, a 3% increase. Year 16 slows slightly to $7,094,304, down a percent from year 15 but still an increase of 2% from the base year. Year 17 shows net sales at 103.7% of the base year 14 earnings. This indicates the company has worthy cost control in revenue.
When reviewing European sales forecast for years 15-19, we see the same trend as with Custom Snowboards Inc. trend analysis. European net sales will increase from $1,391,040 to $2,423,748, or 74% during the 4 years. Using year 15 as the base year, in year 16, net sales are predicted to be 120%, 144% in year 17, 158% in year 18, and 174% in year 19.
Operating Expenses. The selling expenses that include