Jet2 Financial Analysis Task 1

9373 Words38 Pages
Competition Bikes Inc. Summary Report JET2 Financial Analysis, Task 1 May 27, 2014 Introduction Formed in 2001, Competition Bikes manufactures high grade bicycles for professional and other accomplished riders who compete in bike races, biathlons, and triathlons. The purpose of this report is to provide an evaluation of the company by analyzing its operational strengths and weaknesses, working capital and internal controls. A1a. Horizontal Analysis: Horizontal analysis is an evaluation of a company’s financial trends year over year, with the variations being shown in both dollars and percentages. In the financial statements provided, the horizontal analysis is between years six and seven, and years seven and eight; respectively. In evaluating the horizontal analysis for Competition Bikes’ income statement and balance sheet, several strengths and weaknesses were identified and are outlined in the following paragraphs. Income Statement Horizontal Analysis: Revenue: Between years 6 and 7, net sales increased by 33.3% or $1.495M. Competition Bikes was able to increase sales substantially during this time frame. However, the company was not able to sustain the growth in sales between years 7 and 8, which resulted in a decrease in net sales of -15% or $897,000. The company’s loss in net sales in year 8 is a weakness due to overall sales being down. Cost of goods sold (COGS) between years 6 and 7 show an increase of 31.8% or $1,048M. The increase in COGS corresponds closely with the increase in net sales for the same time period, which illustrates the company’s ability to effectively control its inventory levels and material costs. For years 7 and 8, the cost of goods sold decreased by -14.5% or $630,400, which again corresponds to the change in net sales for the same period. This shows that the decrease in COGS is a result of reduced

More about Jet2 Financial Analysis Task 1

Open Document