Wgu Jet Task 2

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Financial Analysis Task 2 Competition Bikes, Inc. (CBI) has identified and produced a ProForma for year 9 of the company. There are a number of areas of concern when reviewing this document that need additional review and evaluation prior to budget becoming finalized. In the Sales Budget, CBI identified that they were going to increase units of sales to 3,510 and this is an increase over year 8 of 87 units. Year 8 experienced a 15% decline over budget due to the economic situation yet sales trends are expected to remain consistent and the company is planning to recover from the decline in the next 3 years. A number of areas could be the reason for the decrease in sales in year 8 including the economy which could have led to outside sponsorships being decreased. However CBI is continuing to plan for growth in a 3.2 % increase that is greater than could be a reality and a concern for such percentage. There is no historical data to show that a plan is in place to achieve this additional sales increase and coming off a hard economic year, it is concerning that this achievable. The Selling, General and Administrative Budget is another area to review for concerns in the budget planning area. Advertising is budgeted at a flat percentage of 2% of gross profit or $28,412 for year 9 and this has remained consistent for each of the previous 3 years. For a company that is looking to increase sales by 3.2% as stated above, the company needs to take a greater focus on advertising to generated increased sales. Executive compensation is another area of concern. The company sustained executive compensation from years 7 and 8 at the level that is also budgeted for year 9 and that amount is $220,000. The company saw great growth and sales in years 7 to justify this amount in year 8 however the company needs accountability from its executive leaders to sustain

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