Fianancial Analysis

1802 WordsMay 23, 20158 Pages
Financial Analysis Task 2 Jamey Lewis Western Governors University Financial Analysis Task 2 Budget Planning Concerns Based on Competition Bikes, Inc.’s budget for year 9, there are some concerns that should be addressed. The first area of concern is Revenue from Sales. In Year 9 Competition Bikes, Inc. is forecasting for Sales of 3510 units to be sold this would be 103.2% of the 3,400 units sold in year 8. This would increase Net Sales to $5,247,450 opposed to the $5,083,000 Net Sales in Year 8. I find this to be a concern because in year 8 Competition Bikes, Inc. had a 15% decrease in Net Sales from year 8. I don’t see the market changing that quickly over a 1 year period. Sponsors may still be hesitant to spend big money on professional riders. Accounts Payable is a concern. I think Competition Bikes, Inc. should not budget year 9 at $229,203 because it is lower than year 8 ending Account Payable Balance. Since Accounts Payable has historically been 10% of purchases, then year 9 should have an ending Accounts Payable that is higher. Another concern in Competition Bikes Inc.’s planned budget is Other General and Administrative Expenses. In year 9 Competition bikes is planning to budget $170,000, which is approximately 3.2% of Net Sales. They should budget less due to the fact that in year 7 they only spent $158,000 (2.6%) of the 5,980,000 in Net Sales. Cash and cash Equivalents is also a concern for year 9. Cash and Cash Equivalents are budgeted for $523,492, which is higher than year 6, 7, and 8. Competition Bikes should put more money toward short term investments so they can generate more revenue. With that decision, I feel short term investments is also a concern. Historically Competition bikes has put 220,000 in Short Term Investments. I think Short Term Investments should be increased. Flexible Budget Performance Report Competition Bikes, Inc.

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