JET2 Financial Analysis Task 5 Part II WGU

4029 Words Jul 29th, 2014 17 Pages
Custom Snowboards Inc.
Managing Capital & Financial Assets
05/10/2014
WGU JET2 Financial Analysis
Task 5, Part II - PASSED To: Chief Executive Officer (CEO) of Custom Snowboards Inc.
Subject: Report of historical data and recommendation on how to proceed with expansion plans to Europe.

European Expansion Historical Analysis

To make a decision about expansion to Europe, we must first analyze past performance as an indicator about future performance. A historical analysis was completed on the company’s past balance sheets.

Custom Snowboards Inc. has had increased net sales in the past three years. Net sales went up .23% in year 13 and .93% in year 14. Cost of goods sold (consisting of direct material, labor, and overhead) and in
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114.2% in year 13 and another 30.6% in year 14. Consistent increase shows well for the company but since sales went up 23% in year 13 and .93% in year 14, the cash should have increased more in year 14 however, furniture, fixtures, and equipment went up 200,000 which means the company purchased more assets for the company. Custom Snowboards is putting the money back into the company without taking on more debt which indicates a decent cost control. Custom Snowboards most likely took money from their short term investments to pay for the furniture. The short term investments dropped significantly in year 14 by more than 80%. This caused a decrease in total current assets but the overall total assets remained healthily increasing, partly due to increase in finished goods and raw materials inventory. Overall, Custom Snowboards uses respectable cost control in assets.

Liabilities. Accounts and notes payable increased proportionately to the net sales increasing total current liabilities by the same proportions. Mortgage payable decreased consistently over the three years as did other long term liabilities. Overall, liabilities continued to decrease over the three year period.

Stockholders Equity increased over the three year period. Common stock remained steady at $200,000 ($1 par) and so did paid in capital. Retained earnings increased every year, a plus for the bank. Return on total assets, return on common equity, and price/ earnings

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