Jet Task 1 Essay

3708 WordsAug 20, 201315 Pages
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…
Because the loss in years seven and eight was less than the gain in years six and seven, the company nearly broke even in years seven and eight, from the totals of years six and seven (Shim, J. and Siegel, J. 2009). Vertical Analysis The vertical analysis involves exploration of the balance sheet statement and shows each component as a percentage of the total assets. The vertical analysis of the income statement explores the proportion of the income statement variables to the total sales. The analysis helps show the financial performance of a business with time. Year six Total assets = $4,199,303. Year seven Total assets = $4,319,217 Year eight Total assets = $4,316,817 Vertical analysis of the balance sheet for Competition Bikes for years six through eight Account | Year six (%) | Year seven (%) | Year eight (%) | Accounts and notes payable | 1.6 | 4.5 | 6.1 | Accrued Salaries and related expenses | 0.4 | 0.3 | 0.3 | Other accrued expenses | 0.5 | 0.6 | 0.6 | Mortgage | 42.9 | 39.4 | 37.1 | Other long-term liabilities | 2.1 | 2.0 | 1.9 | Stockholders Equity | 52.5 | 53.3 | 54.1 | The vertical analysis of Competition Bikes, Inc. measures assets, liabilities, and equities. With the vertical analysis of overall operating expenses fluctuating little over the three-year period, this indicates a strong internal control, allowing for little depreciation of the company based on operating costs, versus sales. In general terms,

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