Financial Analysis – JET2 Task 1
Report for Competition Bikes, Inc.
Competition Bikes, Inc was formed in 2001 and manufactures professional and performance bicycles used in a variety of racing events for expert riders. Bicycles produced by this company are ridden by 60% of all race winners and word of mouth has been their main marketing strategy. Competition Bikes is also the first company to use drive shaft technology in their bikes, which sets them apart from their competitors. A horizontal, vertical, trend and ratio analysis of Competition Bikes has been completed and is summarized in the review below.
HORIZONTAL, VERTICAL, & TREND ANALYSIS
Beginning with a comparison between year 6 and 7, sales in units rose from 3000 to
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A review of the company’s assets shows that cash and cash equivalents have declined 64.6% from year 6 to year 7. This is a weakness in that the company only has a little over one months operating expenses on hand in the event of an emergency. Short term investments are up 10.8% which might offset the company’s cash and cash equivalent shortage if funds could be transferred in a timely matter. The company has had a 164.3% increase in net accounts receivables which might account for the shortage of cash on hand as well. The company predicts a slower rate of growth due to economic factors in the future the large amount in accounts receivable indicates that they are having some difficulty in collecting from their buyers. Their raw materials inventory has declined 15% in year 7 from year 6. This could be a concern in the future as materials become more difficult to obtain and can slow production. They do have more finished goods inventory which is 31.8% higher in year 7 than year 6. Overall, total current assets increased 31.5% from year 6 to year 7 which is a strength for Competition Bikes. Looking to the company’s liabilities accounts and notes payable have increased 192% from year 6 to year 7 which has contributed to the increase in total current liabilities by 122.4% , and ultimately the overall increase in total liabilities