Wgu Financial Analysis

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Western Governors University JET2 Financial Analysis Task 1-Financial Statement Analysis and Controls A. 1a. Evaluate the company’s operational strengths and weaknesses based on the review of the horizontal analysis, analyze results and discuss operational areas of concern: This financial analysis will serve as a review of financial statements of Competition Bikes, Incorporated. The financial analysis will help Competition Bikes determine areas of strengths and weaknesses and give recommendation and uncover areas needing improvement thus improving financial viability. Horizontal analysis is a financial statement analysis technique that demonstrates changes in the amount of corresponding financial statement items over period of time. It is a useful tool in evaluating the trends represented on a balance sheet. The statements for two or more periods are used in horizontal analysis. The changes are generally shown in percentages and dollars. With horizontal analysis, the guideline or base year is represented and other years are compared to that base year. In reviewing the horizontal analysis for Competition Bikes Incorporated, year six will serve as the base year. We will evaluate the period of time between years six through year eight. As for a financial analysis for year six through seven, we look at percentages of performance. First, reviewing net sales for years six and seven, we appreciate a change of $1, 495,000 which translates to a thirty three percent increase. Since the change supports an increase, we know Competition Bikes experienced an increase in sales and operational performance. Next, costs of goods sold demonstrate a positive increase of 31.8% totaling $1,048,000. This value is indicative of the accumulated total of all costs associated in creating a product or service, which has been sold.

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