Competition Bike Incs Essay

Horizontal comp send away comp ars a lodges surgery from category to family. I provide be reviewing Competition Bikes Inc(CBI) balance rags and income lines. During CBI twelvemonth 6, 7 and 8 I brook nominate their earnings gross revenue , cost of goods to be fluctuating, and few various separate tokens. The remune symmetryn gross revenue from course of study 6 to 7 growing 33.34 %. The cost of goods from twelvemonth 6 to 7 was 31.82 %. The gross net income accession 30.89. Comparing course of instruction 6 and 7 I found that course 7 repaird, scarcely when I comp ard course of study 7 to 8 the results were non good for socio-economic class 8. The ships comp from each whizz(prenominal) had experienced a 15 percent decrease in sack sales. Cost of goods lays 14.8 % from course 7 to 8. advertise ExpensesCBI advertising expenses change magnitude by 37.5 % from yr 6 to 7. CBI do a massive investment from yr 6 to 7 be bring the pull in sales impr e verywhere at a higher rate the change magnitude advertising cost. CBI reduced their advertising expenses by 16.3 % from course 7 to 8. I believed this was through because of the fragile prudence. Many companies are trying to produce cuts back during a timid economy. These reduces expenses volition hold them over until the economy becomes stronger.Website/gross revenueThe website creation and maintenance expenses during twelvemonth 6, 7 and 8 stayed the same expenditure. Sales commission summation 33.371 % during family 7 from the previous(prenominal) social class. Sales commission belittle by 15 % the pastime class (8).Distribution acquitworkThe Distribution earnings expenses had a positive subjoind in twelvemonth 7 by33.3 % jump from the previous year. Distribution expenses are norm all in ally sibylline to notice similar numbers, but when you experience an enlarge in sales it is congenial to improver the distribution expenses. Distribution lucre expen ses accrued 15 percent in year 8. This was caused re impartable to less revenue. window paneCBI had 33% battery-acid increase from year 6 to 7. This was caused CBI had more products change and es directial more products to be shipped. CBI dictum 15 % transportation decrease from year 7 to 8. CBI had less products sold and this caused transportation to decrease in year 8. administrative Expenses from year 6 to 7 saw 21.43% increase. administrative Expenses remark the same expenses from year 7 to 8. Executive expenses increased 29.42 % from year 6 to 7. twelvemonth 7 and 8 maintain the same level of expenses.Employment taxes come up by 25.81 % increase from year 6 to 7. twelvemonth 7 and 8 maintain the same level of employment of expenses. administrative expenses are take careed requestable to participation having increase production and sales. Utilities expenses rose 3.84 % from year 6 to 7. CBI ope symmetryn worked proficiently in year 7, and this aided them experienc ed but an increase of 3.8% in utilities. This was caused repayable to increase production. CBI utilities increased by 11.11 during year 8. I would intimate CBI have their utilities monitor from solar day to day to key how they deal proscribe an increase in expenses when the community is not come soundly compared to the previous year.ResearchCBI saw search and reading saw a 37.5 % percent increase from year 6 to 7.During year eight CBI reduces their research and festering expenses by 16.3 %. A high society should never reduces their research and development if they federation perform well in the previous year. I believe this was one of the reasons why CBI had a great(p) year during 7 because they k bare-ass what consumers wanted. due(p) to overlook of spending on research and development this caused their sales to recede. Research and development is an essential component of competition against other companies without a club pull up stakes beetle withd raw t o succeed. rice beer IncomeCBI interest income rose 38.1% from year 6 to 7. During year 7 CBI income was mightily invested. During year 8 CBI investments had a 3.4% reduction. The reduction was small, but small affairs do enlarge up over mea positive(predicate). I would extract CBI to monitor their investments and impart plans to move round their funds if the authentic trend continues.Balances sheetsCBI accounts due rose 164.3% from year 6 to 7. During year 8 CBI accounts due drop 15 percent. CBI should monitor accounts receivable more almost to fabricate accepted past due balances are paid on era. This was caused due to the company noticing a large increase on accounts receivable during year 7 and they tried to enceinteize on it. This caused their accounts receivable to drop.Raw MaterialsCBI manages their raw materials well during year 7. CBI had 3.1% percent reduction in year 8. CBI should incorporate thin production method and Just in time production to counterm and wasteful spending and production.LiabilitiesCBI liabilities increase 1.2% from year 6 to 7. This is expected due to year having 7 having an increase in sales and productions. CBI reduces their liabilities by 3.1% from year 7 to 8. This is good because CBI had a 15 percent reduction in last-place sales. perpendicular synopsisA method of fiscal statement analysis in which for each one entry for each of the three study categories of accounts (assets, liabilities and equities) in a balance sheet is represented as a equalizer of the complete account. The main advantages of vertical analysis are that the balance sheets of businesses of all sizes can easily be compared. It likewise makes it lucky to see relative yearly changes within one business(Investopedia,2013).IncomeYear 7 net sales were 7% higher than year 6.CBI preserved their selling expenses at 6.7% of total Net Sales. CBI reduced General & adenine Admin Expenses from 17.1% during year 6 to 15.5% during year 7.This wo uld go to an increase in operating(a)(a) Income from 2.8% of Net Sales from year 6 to 5.3% in year 7 and CBI Net honorarium would increase from 1.1% (year 6) to 3.3% (year7). CBI did not perform well in year 8 because their expenses increase during year 8. This caused CBI net earnings to reduce.. CBI Administrative expenses increased 15.5% from year 6 to 7. CBI net sales increase 18.4% from year 7 to 8. CBI operating expenses income was reduce 5.3%of net sales to 1.9 % causing CBI net earnings from 3.3% to a .7%.I would advise CBI to monitor their normal and Admin expenses. Majority of expenses stayed the same during year 6,7 and 8. up to now during year 8 the CBI did not perform well. I believed CBI unavoidably to set out ship canal to reduces expenses when the company is having a low sales volume. CBI should incorporate just in time principles and lean manufacturing principles. I believe this would process reduce wasted production and this would help reduce utilities expen ses. Just in time principles and lean manufacturing principles could also reduce employee expenses.ASSESTSCBI in the specie and cash equivalent accounts drop from 6.2 % in year 6 to 2.7%. However, during year 7 more products were sold compared to year 6. CBI accounts receivable had a major increase from year 6(6.5%) to year 7(16.6%).CBI of necessity to monitor their accounts receivable accounts more closely and make certain(predicate) theyre collecting the make sense owed to them. During year 8 CBI cash and cash equivalents had risen from 2.7 %( year 7) to 10.3%(year 8). The reason why this happen was due to CBI had started to monitor their accounts receivable. This helped them collect the money they were owed on past due accounts. I would recommend CBI to avoid fashioning purchase on accounts and find ship canal to use the cash in a more efficient way. CBI should realize it important they have enough reserves during a recession. This allow for help hold them over until the ec onomy bounces back.Trend Analysis is the implement of collecting information and attempting to spot a pattern, or trend, in the information (Wikipedia,2012).CBI sales were lower than year 7, but they nonetheless were able to make a profit. CBI should expect to see growth in the coterminous few years establish on their current trend. CBI is expected to have 3,510 units sold in year 9. CBI give have 3,660 units sold in year 10. finally during year 11,CBI will sell 3,800 units. The medical prognosis numbers are based on the economy recovering. This will encourages CBI sponsors to invest in professional riders and this will increase new bike sales. Currently is cost CBI 1,047.50 to make each product. I would recommend CBI find suppliers who have the same quality parts, but at a lower cost. I would also make recommend CBI is following just in time and lean manufacturing principles. This could help CBI increase their profit b locate. proportionality analysis- analyzes numbersRatio analysis is a method used by businesses to appraise their monetary situation by analyze two sets of linked data. Current symmetry will measure a companys ability to pay shortsighted-term obligations. CBI had a reduction from year 7 (5.9%) to 8(5.35%). Two wheel racing (TWR) current ratio was 4.2% for year 7 and 8. A debt ratio will determine if a business is able to handle any unexpected liabilities it that may come up. A business needs to make sure they enough money to pay off debt to avoid problems with their debt. During year 7 CBI debt ratio was 46.8%. The follow year the debt ratio was 46%. The debt ratio only drops .08 percent during year 8. TWR debt ratio was 38% in year 7 and 8. An acid test ratio will determine if a company can back their liabilities. CBI is doing split up than (TWR) by 1.12% and .85%.Inventory turnover- determines the number of times a company can sell it bonnie level of parentage throughout the year. CBI bicycles are customizes for customers so I am in useful to compared CBI and TWR. Average collection period, This determines how well a company is able to collect money to the customers they extended credit to.CBI has higher roll up amount compared to TWR. CBI was 11.3% higher in year 7 and 8. Gross pull ahead Margin, will tell investors how much revnue was gain later on selling the product(Cost of Good-revenue/gross profit. TWR profit margin is 32.10% higher than CBI profit margin in year 7(27.4%) and 8(27.0%). TWR is operating more effectively.Operating profit margin Measures management cogency (Operating income/total sales). CBI year 7 was 5.3% and TWR was 5.2%. Year 8 TWR performed better with 5.3% compared to CBI(1.9%). Net Profit Margin show investors the percentage of each sale dollar earn as net income. During year 7 CBI net profits was 3.3% and in year 8 it was .8%.TWR was 5.14% year 7 and 8. The portion of a companys profit allocated to each outstanding share of common stock. winnings per share serves as an i ndicator of a companys profitability(Investopedia,2013).TWR was $.08 for year 7 and 8. CBI was $.20 during year 7 and $.04 in year 8.Return on total assets-determine how successful a company is to earn profit with their assets. TWR total assets was 4.8% for year 7 and 8. CBI was 4.5% in year 7 and year 8 was .8%.Return on Common Equity- Income amidst net income and stockholder equity. During year 7 CBI equity was 8.5% AND TWR was 8.1%. CBI equity in year 8 was 1.5% and TWR was 8.1% Price / Earnings Ratio- investment hearty prices and company earning. CBI earning share 49.67 and TWR was 29. During year CBI price jump to 83.73 and TWR was still 29. Times Interest Earned Determines the numbers of times operating income can pay interest expense. Year 7 interest earn was 5.27 and TWR was 4.24. During year 8 CBI interest earn drop to 1.77 and TWR remained 4.24.Working capital is a pecuniary careful(current assets minus company liabilities) which represents operating fluidity availa ble to a business, organization or other entity, including governmental entity(Wikipedia,2013). The financial metric system will analyzes if a company will be able to pay their short term liabilities or do they need to take an alternative solution. CBI operative capital in year 6 was $382,394 CBI working capital at the end of year was 1,306,617. CBI increased their working capital by 70.7% at the end of year 8. After reviewing CBI working capital the results indicated they will be able to pay their short term liabilities passI would recommend CBI to have their accounts executives to build a better relationship with customers and make sure theyre satisfied with the work they are receiving. wiz of the most important things a company can do is listen to their employees. I would also recommend CBI to reduce their accounts receivables. This could be done by making sure that larger orders from customer are sent out faster. CBI arsenal cost increase over 24% from year 6 to year 8.CBI sh ould follow the just in time and lean manufacturing principles. This will reduces inventory cost for CBI. CBI transportation expenses are one of their highest expenses. I would recommend CBI to consider to get their own delivery truck and see if this will help them reduce their transportation expense. indwelling manipulates intragroup checkers helps a company infrastructure run smoothly. Internal ascendencys also help protect and prevent fraud. Internal reign over will try to collide with the temptations for employee to act unethically in the expectation of putting the company at essay of lawsuit.CBI purchase division (PD) will purchases orders from suppliers based on their monthly budget. Once the order has been accredited the PD will evaluate bids from different suppliers. Once the order has been received theyre given to the production line. The chronicle will be sent to the PD. If thither are any supplies left they will be sent to raw materials. The PD will then send an bill department who issues a check to the supplier.RecommendationI would recommend the whole spotless processed be revamped. The first thing I would recommended is to separate the duties of researching the bid and buying orders. The next thing I would apprize is to make the receiving department in instruction of verifying the shipping when the packages arrive. The receiving department needs to verify every gunpoint is in that location from the supplier and their no missing item from the delivery. The receiving department should maintain an inventory suppress system. After the receiving department has approved the invoice, they should frontwards to the purchasing department. The purchase order will be forward to the method of accounting department for payment. Accounting has currently been only receiving unproven invoices.RiskAccounting has currently been only receiving unverified invoices. The lack of verification could cause CBI to get double charge for item they alrea dy paid for. Currently their lack of inventory control system. Currently jobless supplies are being sent to raw material without anyway of tracking it. This would make it easy for employees to steal because lack of inventory control system.RecommendationI would stir an inventory control system be implemented. I would make sure all packages received by receiving department be verified by management to avoid being double charge. The inventory control system will help prevent theft from employees. I would also exact remote firm every rear to check inventory levels to make sure no one is stealing from the company.Sarbanes-Oxley moldSarbanes-Oxley Act is government regulation that telling pass in order to improve financial disclosures. This would help prevent accounting fraud and improve financial disclosures from corporations(Wikpedia,2013). scratch 302 A mandate that requires senior management to certify the accuracy of the reported financial statement Section 404 A requisite t hat management and auditors establish essential controls and report methods on the adequacy of those controls. Section 404 had very costly implications for publicly traded companies as it is valuable to establish and maintain the required intrinsic controls (Investopedia,2013).CBI does not mention that they were audited by outside firm. I highly recommend CBI to engage auditing firm to review the companys annual statement before relinquish the numbers to the public to make sure in that respect is no accounting errors. Internal controls are implemented and effective at the end of year 8(Dec 31). The chief operating officer, and chief financial officer assay-mark is need because it is required by SOX and this could not be located. Auditor releases the following statement to shareholders. A material impuissance is a control deficiency, or a combination of control deficiencies, in intrinsic control over financial reporting, much(prenominal) that there is a reasonable casualt y that a material misstatement of the companys annual or interim financial statements will not be prevented or find on a seasonably rumpRecommendationsCBI needs to make sure they are in compliance with the regulations set by by Sarbanes-Oxley CB. The first thing I would recommend is to conduct a home(a) control assessment. The next thing I would recommend CBI to hire accounting firm to review their internal controls. The control needs to be based on Sox guidelines. The CEO and CFO needs to certify theyre aware of the CBI internal control and the actions the company have taken to protect investors investments. It is very vital CBI CEO and CFO certifies theyre aware of internal control because Sarbanes-Oxley requires this to be done.Since the accounting firm made assessment that the internal control is effective their might be some problems that could attire from the following statement, A material weakness is a control deficiency, or a combination of control deficiencies, in in ternal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the companys annual or interim financial statements will not be prevented or detected on a timely basis. I would recommend the CEO or CFO to take action square up the internal control problem because they could mettle jail time for making statements that were not true. . CBI should base their guidelines set forth by the Committee of Sponsoring Organizations of the Tread Way Commission(CSOTWO). CSOTWO is critical point inivate five private sector organizations given to providing leadership through progress and counselling on enterprise risk management, internal control and fraud dictation. This is a great way for CBI to improve the internal control process.ReferencesFree Dictionary(2013) http//legal-dictionary.thefreedictionary.com/Sarbanes-Oxley+Act+of+2002 Investopedia(2013) http//www.investopedia.com/terms/h/horizontalanalysis.aspaxzz2Hh4rgfuE True Bussiness(20 13) http//truetobusiness.com/finance/ratio-analysis Wikipedia(2013) http//en.wikipedia.org/wiki/Internal_control