Competition Bikes Case Study

5658 Words 23 Pages
Register to read the introduction… More so, accounts payable total $261,200 indicating that payables are 4.6% of total assets. Overall, it shows how much debt the company holds in proportion to its assets and how short-term debt directly compares to short-term assets. The higher the proportion of short-term assets, the stronger the company's working capital position and its ability to meet its near-term obligations. Obviously, the total liabilities of Competition Bikes, Inc. have been decreasing over the three years, signifying an improvement in the company’s capability to settle its debts.
In terms of liabilities and stockholders’ equity balances, only common stock and retained earnings exceed 20% of total assets (or alternatively 20% of liabilities and equity which equals total assets). It is noted that balances as a percent of total assets are quite consistent with less that 1% changes between year 6, 7 and 8. A1c. TREND ANALYSIS
The purpose of the trend analysis is to outline a pattern in the report over a period of time, in this case year 6, 7 and 8. This will estimate uncertain events in the past and predict future outcome.
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The acid-test ratio in year 7 equals 4.41 and in Year 8 equals 4.14. Although, there is a marginally decline from the ratio in year 7 with a difference of 0.27 % all indication states that both years are above the required ratio. This is strength for the company because the company has the capability to pay its current liabilities. Competition Bike’s Inc. current ratio of 5.25 in Year 8 shows a 1.05 difference in comparison to the 4.2 industry standard from Two Wheel Racing in Year 8. The company ratio is higher which shows as a strength to the company in terms of financial stability and

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