Net sales have decreased in year 8 compared to year 7, while gross profits have dipped from The total selling expenses for years 6 through 8 have increased fromin year 6 toin year 7 and thenin year 8.
The Times Interest ratio shows how a company can pay the interest payments. The collection process for Competition Bikes is an area that needs improvement as it currently mails invoices on a 30 day term. Review of Internal Controls Competition Bikes does not have procedures in place to address the flow of materials through the entire process of production.
While this is a good marketing tool, I question the process for time management purposes.
The inventory and accounting systems could be linked as well. General Administration expenses have increased form It is easy to see a relative annual change within one business with a vertical analysis. Risk Mitigation Simple software programs for inventory management and purchasing as well as establishment of a receiving department can help the company streamline processes.
With a steady increase of working capital the company can increase advertising, improve operations, expand production and pay down debt. The modest increase in sales does not show enough to recover without making adjustments to free capital.
This process would be monitored in a more timely and accurate process if governed by an inventory system. Evaluation of Internal Controls Internal controls are set in place to monitor the processes and procedures of the company.
Profit margin compared to competition is a strong way to asses risk. Receiving three bids for materials every time an order is received may be a lengthy process. Ideally the industry standard is a ratio of 1: The lack of a receiving department is a large risk for this company.
This ratio actually takes the inventory the company has into consideration. In Years 6 and 7 the competition Bike Company had a There should be receiving department that will receive the materials, send an invoice to the accounting department, a separate step to match the purchase order to the packing slip, once accomplished the next step to have an authorization of payment sent for payments from bank accounts.
The Debt ratio compares debt capital to total assets. This shows the company can pay off all liabilities immediately. This signals some work on cost cutting and compensation evaluations are needed to stay on budget. Creating a contract with a vendor may save time and help monitor inventory.
Competition Bikes Net Income has decreased from 2. Without this process there is no way to track materials and payments of materials. Using year 8 as a starting point when forecasting years, the company has modest increases, but not enough to commit to a huge recovery. Competition Bikes may benefit from varying the use of shipping and creating ship dates with vendors.
Tying the purchasing system to an inventory control system will also decrease order errors, allow for historical data to drive timelines relating them directly to production time lines. Each bike made at Competition Bikes is checked individually.
Sales also drop between years 7 and 8 and the gross profit margin decreased as well. Each bike is created based on a specific customer measurement, this individual process can only check for specific mechanical defects.
The main advantage of vertical analysis is that the balance sheets of any business can be compared. The use of more marketing may increase sales. Material flow from ordering, receiving, invoicing, payment, reorder, usage and left over materials are accounted for in the company process.Competition Bikes Inc.
Storyline Managing Capital & Financial Assets 04/12/ WGU JET2 Financial Analysis Task 4 - PASSED To: Vice President The following is a summary report to recommend whether Competition Bikes should change its traditional costing method to activity based costing, and an analysis of the breakeven point with regards.
Horizontal analysis Horizontal analysis allows side by side comparisons on a year to year basis to determine the performance from one year to the next - Financial analysis task 1 wgu introduction.
The company decides on standards to compare the results of the analysis.
Standards are researched by checking competitors, internet research of. Competition Bikes Inc. Storyline Operational Analysis 03/10/ WGU JET2 Financial Analysis Task 2 Introduction In this task, the budget schedule and proformas as well as the flexible budget were reviewed. Task 5 is a summary report on the key points of the company's financial picture, how financial risks could be mitigated, an analysis of the.
Financial Analysis Task 1 Western Governors University Horizontal Analysis of Competition Bikes, Inc. In a horizontal analysis of years seven and eight it. Free Essay: Competition Bikes Inc.
Storyline Operational Analysis 03/10/ WGU JET2 Financial Analysis Task 2 Introduction In this task, the budget.Download