Jet Task 1

3508 Words15 Pages
A.1 Throughout this paper, the “Competition Bikes Inc. Storyline” case study will be used to prepare a summary report based on the evaluation of the company’s operations.
The objective will be to evaluate the company’s operational strengths and weaknesses based on the following:
a. Horizontal analysis results
b. Vertical analysis results
c. Trend analysis results
d. Ratio analysis results
As defined by Business Dictionary (2014) Horizontal Analysis is ” Comparative study of a balance sheet or income statement for two or more accounting periods, to compute both total and relative variances for each line item.” Competition Bikes Inc. will be analyzed in each area in regards to years 6, 7, & 8. Analyzing the strengths and weakness of
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Lastly, a major strength of the Vertical Analysis is the year 7 Accounts Receivable, net listed at $717,600, 16.7%. This is a major strength for Competition Bikes Inc., meaning they have a positive cash flow and very efficient, strong credit collection policy. Competition Bikes Inc. also experienced weakness in regards to the Vertical Analysis. Firstly, Total General and Admin Expenses for year 8 are significantly higher than from year 6 and 7. The dollar figure is $935,119, at 18.4%. The larger the expenses are the less total revenue Competition Bikes Inc. will have at years end. Another noted weakness of the Vertical Analysis is the Accounts and Notes Payable for year 8. This is a significant increase from years 6 and 7 at $261,200, 6.1%. A much higher liability compared to previous operating years. Competition Bikes Inc. must carefully manage this area of spending to guarantee a successful operation moving forward.
Investopedia (2014) defines Trend Analysis as “an aspect of technical analysis that tries to predict the future movement of a stock based on past data. Trend analysis is based on the idea that what has happened in the past gives traders an idea of what will happen in the future. There are three main types of trends: short-, intermediate- and long-term.” Firstly, discuss the strengths of the Trend Analysis for Competition Bikes Inc. From year 6 to year 7, there was a strong growth in regards

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