Financial Analysis Task 1 Western Governors University Horizontal Analysis of Competition Bikes, Inc. In a horizontal analysis of years seven and eight it appears that though there was a reduction in net sales the cost of goods sold and gross profit all reduced at similar rates which indicate that as sales dropped overall materials cost did as well and that inventory was well managed. Selling expenses also change consistently which indicates the company made smart decisions around selling their products as demand declined. Lastly, the long term liabilities reduced which shows that the company did not take out further debt to finance operations. A couple of points to look at include the fact that utility expense increased 11% year over year.
2010) is provided below. 1167872 4 Despite the leading position and the good business results, SWOT shows several sources of potential risks for UST. The company is losing market share against new price-value competitors because of slow innovation and late product introduction and extensions. Historically, UST relied on his leading market position boosting earnings with annual prices increases. But in the meanwhile smaller competitors started to quickly erode market share with prices cut.
Audi's global sales rose 8.3% to 1.58 million vehicles in 2013 however despite the increase in revenue, the net profit fell 7.7% ($5.57billion) and the operating profit margin fell to 10.1% from 11% the previous year. Based on this one could assume Audi is experiencing diseconomy of scale. But when you dig deeper into their situation the reasons for a lower net profit is not because of a “per-unit” cost of production which would truly mean they are operating as a diseconomies of scale. The true reasons appear to be because of their expansion investments. As per the article Audi “warned that profit would be hit by investment in new models and tougher climate regulation”.
Factor number two is the company offering free shipping to orders over $100. Not only did this cause the company to lose the income that it brings in for shipping and add shipping costs to it’s expenses, it also added to marketing by $13,000 plus an additional $32,000 for magazine marketing when ‘Marketing and administration’ it was only budgeted at $90,000. The shift in the economy during this time frame affected the budgeted ‘labor’ expense due to the increase in pay for it’s hourly employees. All of these factors combined worked against the company to cause a negative in operating profit. Although AGM fell short in meeting it’s master budget for this quarter, these unexpected occurrences can help them to better budget for the future of agm.com.
The first concern is the projected units that will be sold and the amount of revenue in year 9. The company’s sales budget indicates that 3,510 units will be sold in year 9, generating $5.25M in revenue, which is an increase of 3.2% over year 8. While the forecasted units of 3,510 in year 9 seem in line with the 3,400 units sold in year 8, it is in sharp contrast with the trend over the past 2 years. In reviewing the horizontal analysis data, revenue increased by 33.3% between years 6 and 7 then dropped by 15% between years 7 and 8 due to the decline in economic conditions. The weaker economy resulted in sponsorship cutbacks for professional riders.
1. 2011 2012 ROCE = 30% ROCE = 34.58% Gearing = 32% Gearing = 28.2 % Asset turnover = 4.83 Asset turnover = 2 .38 Appendix A gave me a overall view of superstyles profitability and asset turnover. In 2012 superstyle has increased its return on capital employed by nearly 5 %. This is an advantage for the business, as it states that the business gets more money back from their money invested in 2012. Not only the ROCE has improved, the gearing ratio has decreased by 4%.
Disney shares jumped 84 cents, or 2.5 percent, to $34.57 in after-hours trading. The shares gained 44 cents to end the regular trading session at $33.73 before the earnings were announced. Tourists from abroad also took advantage of the weak dollar, increasing park attendance and spending. Resort revenue grew 11 percent to $2.73 billion, and hotel bookings at the resorts through 2008 were trending higher than last year, the company said. "We're definitely benefiting from the dollar weakness ... in two ways," Chief Executive Robert Iger told analysts on a conference call.
Ratio Analysis From 2006 to 2007 Britvic’s net profit rose by 0.3% while gross profit fell by 1.05%, therefore production cost was reduced, which can be due to the deal with C&C (Magners cider maker) and the acquisition of Ballygowan water which brought a cost saving of €14m. Over the past 5 years, 2010 achieved one of its highest gross profit 55.3% and net profit was never so high at 7%. The deal with C&C also made Britvic’s share prices raise and it reached its highest price (399p) over 2 years period. As many companies, Britvic in 2008 was also affected by the global economic crisis and in that year gross profit fell by nearly 8% but net profit was not affected as much. Britvic’s pubs trade was also affected by the recession, company shares fell to its low in 5 years, reaching 222.25 p, a difference of 165p comparing with previous year.
Procter & Gamble Case Analysis Financial Stagnation: In this case study, Procter & Gamble (P&G) has experienced disappointing financial reports for the year 1999-2000. Profits, excluding reorganisation costs, grew by only 2 %, to $4.23bn, and it’s flagship brands endured disappointing growth, causing the company to scale back its growth forecasts. (Jones, 2001) P&G has responded in two ways. Firstly, it has acquired Clairol, the shampoo and hair-colouring business, for $4.95bn. This led to a 4% drop in share prices.
As Sturgeon & Van Biesebroeck (2009) point out that the “automobile and business cycles usually move in line with each other but the amplitude of the cycle is higher in the automobile industry”. The volatility of the automobile industry is also higher than that of the manufacturing industries as a whole, and intertwines with the business cycles. Sources of Industry Collapse: The auto industry has been severely affected by the economic downturn, and car sales collapsed across the board at the start of the crisis. Miravete & Moral (2009) point out that “evidence for the United States and Canada suggests that the reduction in car sales since mid-2008 has been magnified by the lack of access to credit, leading many households to postpone their car purchases”. This implies that continued improvement in financial market conditions could provide an impetus to car sales.