SciTronics had $ 75,000 of owners’ equity and earned $ 14,000 after taxes in 2008. Its return on equity was 18.67% an improvement from the 8.2% earned in 2005. Activity Ratios: How well does the company employ its assets? 1. Total asset turnover for SciTronics in 2008 can be calculated by dividing $ 244,000 into $ 159,000.
Brompton Bicycle SWOT Analysis The managing director of Brompton Bicycle is looking to increase theWW market share that the company has whilst still maintaining the company’s image of quality products. However, the company faces a number of obstacles in order to achieve this. I have detailed the The strengths, weaknesses, opportunities and threats the company faces are detailed in the SWOT analysis below. Strengths Estimated Sales of 19,000 bicycles this year. Estimated pre-tax profit of £925,000.
His 2008 gross profit is 3.67% lower than the industry average (or 1.1% of sales). All else being equal, a 30% gross profit (the average) would have increased his net income by $4600. 600×0.30-155.01-0.30=17.5
Financial ratios, especially when listed for multiple years in a row, can really expand what you are seeing on the financial statements with just a glance. The asset turnover ratio was decreasing towards 1 from 2000-04. As Krispy Kreme expanded assets were likely increasing. The fact that the ratio pushed from 2.1 to 1.01 in just four years shows those sales were not increasing proportionately with all the growth the company was experiencing. Exhibit 7: By a raising current ratio, we can see that Krispy Kreme is much more able to pay debt within the next year.
Executive Summary Bob Moyer founded Mile High Cycles, (MHC) a company specializing in high-quality, handcrafted mountain bikes. During a time when sales for other types of bikes were declining, nationwide demand for mountain bikes was growing. In 2004, MHC was able to meet the additional demand for mountain bikes and had produced 800 more bicycles than originally planned; however, Bob wondered if costs at MHC were being managed effectively. Due to the increase in production in 2004, there are both direct cost and overhead variances when evaluating actual costs against flexible budgeted costs. Using a flexible budget is more accurate in this instance as it captures the change in anticipated production from 10,000 to 10,800 bikes.
Improving Working Capital There are several ways a company can improve its working capital. A major way to improve Competition Bikes’ working capital is to increase its finished goods inventory. For example, the company is currently showing zero finished goods on the balance sheet for all three years. By finishing product, the current assets would be increased, and therefore the working capital would be increased. Another way to improve the company’s working capital is by reducing costly expenses.
Concern #6: Other General and Admin. Expenses (costs for various administrative expenses) Competition Bikes, Inc. budgeted: $170,000 Again, this seems too low based on the increasing trend for Other General and Admin. Expenses between Years 6, 7, and 8 ($120,500; $158,000; and $170,000 respectively) (Horizontal Analysis). To keep up with inflation, a more realistic figure would be around $190,000. SECTION A2: Evaluate the flexible budget and its
Balance Sheet analysis shows the company has increased cash assets, significantly reduced debt, and added to stockholder value which makes Riordan financially strong and desired by investors. Income Statement analysis reveals that Riordan has successfully reduced certain costs, but profits are down from previous years. Riordan Manufacturing’s Accounting System requires a number of software modules which will integrate well and greatly reduce the labor intensiveness and nearly 3-week delay of month-end general ledger
This had the several direct effects: a) The new market positioning expanded the size of the motorcycle market out of leisure and into affordable transportation, initially in an area where the U.S. and European motorcycles were less competitive in terms of product features and pricing. b) Honda valued market responsiveness as critical. Consequently, the company invested heavily in R&D, achieving a shortened conception-to-production cycle, and maintaining a “Cold Storage” of future designs at the ready. c) Design and product features supported the positioning and the sales volume: for example, a step through frame, one-handed controls, and an automatic transmission. d) Viewing unit costs as a curve inversely proportional to volume (the Experience Curve), the market philosophy drove down the curve faster.
Marginal analysis backs up this product demand. MPBC should have at least 123 bicycles ready because the probability of selling 123 bicycles is 50%. The marginal profit is greater than the average demand of roughly 37 bicycles. Yearly revenue based on forecast sales is $38,762.50 where the total annual holding cost is $3,056.58. MPBC holding cost to maintain sales, and keep up with growth is only a mere fraction on the dollars.