Financial Analysis: Analyzing Competition Bikes Inc.

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The financial analysis of a business organization involves the complete assessment of the liquidity, profitability, competitiveness and stability of the business. The process is done through using the financial statements of the business. The financial reports are generally presented to top management for purposes of decision making and setting up goals.
Analyzing Competition Bikes Inc.’s financial status requires evaluating its internal operations reflecting the horizontal, vertical, ratio, and trend analysis, as well as its working capital. These reviews provide profit margins allowing for projecting any necessary budget restraints in overhead costs and sales potential. Yearly production performance comparisons, based on overhead …show more content…
The proportion of stockholder equities to the total assets has also been increasing steadily, which an indication that the total capital of the company has been growing.
Trend Analysis
Under this section, the financial performance of the company is evaluated over a period of time. To start with, the balance sheet figures of the business have increased tremendously over the three year period. This is an indication that the company is growing and expanding. The average rate of growth is about 3.3%, which is sustainable. Covering three years of comparative net sales, the trend analysis indicates sales dropped measurably between years seven and eight, the profit margin remained strong because of little increase in overhead costs including production, materials, and carrier fees. This fact alone makes the prospectus of future sales with company stock continuing holding at its rate for years nine, ten and eleven (Shim, J. and Siegel, J. 2009).
From the trend analysis, the company predicts sales will remain strong encouraging stockholder to ride with the company over the next three years with profits at 103.2 percent, 107.6 percent, and 111.8 percent respectively. Finally, by probing the company’s financial statements, we can see that sales is rising at a slow rate (Sales have increased by 8.65% from 2006 to 2007 and by 9.85% from 2007 to 2008), but this small percentage increase in sales is connected with a higher boost
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