Competition Bikes Summary Report Essay
Strengths and weaknesses based on horizontal analysis
There is a 33.3% increase of sales revenue from year 6 to year 7. This is a strength because sales infuse the company with money and allow the company to continue to fund its development of new products and grow the company.
From year 7 to 8 there is an increase cost of goods sold of 31.8%. This may appear to be a bad thing because increasing costs are usually not what a company wants to do. However, in this instance the increased costs are a welcome sight because of the increase productivity and sales. As an added bonus to this strength the company is increasing costs at a slower pace than it’s increasing sales revenue. Sales was at …show more content…
Cash and cash equivalent was at 348.2% from year 7 to 8. This is a strength as it shows that the company has achieved some liquidity from the previous period. This indicates that the company will be able to pay their liabilities.
Accounts receivable from year 6 to 7 was at 164.3%. This is a strength because this will be a steady stream of cash as these accounts come due and will provide the company with money.
Retained earnings from year 6 to 7 was 17.4%. A high retained earnings provides the company to pay off liabilities and/or re-invest in the business so that it can continue to innovate and grow and is a great strength for the company.
Shareholder Equity increased 3.2% from year 6 to 7. This is a strength because the company is growing and the stockholders are seeing the company grow. Because this number is not below 3% (inflation) the stock holders are not losing any money at this time.