Financial Analysis Task #5 Essay

7191 Words Aug 17th, 2014 29 Pages
Financial Analysis
Task #5
July 3, 2014

A1. Key Points
Custom Snowboard Inc. CFO Report:
Custom Snowboards Inc. has found a lot of success both in the United States and overseas. Their products are so popular the company is considering an expansion into Europe to better serve their international customers and expand their brand to a new market. However, all the risks of a very expensive expansion must be considered as well as the benefits needs to be reviewed.
The key points that must be addressed in the income statement are:
• Increasing Gross Profits
• Decreasing Net Earnings
• Increasing Total Operating Expenses
• Decreasing Operating Income
The key points that must be addressed in the balance sheet are:
• Changes to
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That dropped to 70,560 in year 13 and eventually increasing slightly to 71,460 in year 14.
The decreasing in accounts and notes give the indication that the company is slowly paying off debts.
Decreasing Total Long Term Liabilities
The total long-term liabilities show a decrease every year. Year 12 it was 860,000 and dropped to 805,000 by year 13 and finally dropping again to 750,000. This tells the CFO that the company is paying off debt every year.
Decreasing Total Liabilities
The total overall liabilities of the company also show a consistent decrease over the three years. Year 12 the total was 990,420 dropping to 930,560, and landing at 876,460 in year 14. This tells the CFO that the company is not accruing any more debt year after year but rather paying off the company’s existing debt.
The company is showing increase in the company’s equity. In year 12 the total stockholder’s equity is 756,451 and increased to 808,351, and increasing even more in year 14 to 822,826. With all the information provided it is safe to say that the potential for the balance of debt to profit ratio will be changed and investors will most likely drop out of the company.
Custom Snowboards Inc. must overhaul their budget sheets to show that they are fiscally responsible and can pay back a large loan from the bank.

A2. Risks
There is no existing company that does not take risks. Risks can be viewed as a positive step for the

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