JET2 Financial Analysis Task 5 Part I WGU
Custom Snowboards Inc.
Managing Capital & Financial Assets
04/19/2014
WGU JET2 Financial Analysis
Task 5, Part I - PASSED To: Vice President for Chief Financial Officer (CFO)
The following is a summary report is an analysis of the current financial statements of Custom Snowboards Inc. The company wishes to be considered for an extended long term loan for a European expansion. We have arrived at a selection of key financial statement line items, conducted a risk assessment, and ratios and if the loan is granted, analysis on how to track the progress of the company’s ability to repay the loan.
Financial Statement Analysis
Income statements and balance sheets were reviewed to summarize the following key points that could impact the loan decision. Horizontal, vertical, trend, and ratio analysis were also reviewed to provide a solid understanding of the financial highlights of Custom Snowboards in the areas of profitability, liquidity, and solvency.
Revenue. Revenue includes net sales, cost of goods sold, and gross profit. Gross profit continues to grow at 30.4% with .23%/ $4,900 from year 12 to 13, and .93%/ $19,600 from year 13 to 14. Net sales also showed the same growth at 100%. The company expects continued growth over the next three years and according to the trend analysis, has the ability to do so. This demonstrates the company’s ability to keep overhead under control and maintain constant margin in relation to sales, consistent year after year. The expenses are variable in relation to the sales. Higher gross sales leads to higher operating income available to service debt in the form of interest payments.
Operating Expenses. The increase in utilities and other general and admin expenses should not fluctuate as they are fixed expenses. This should be reviewed to determine if the increase was due to faulty equipment, temporary increase in market costs, or permanent increases. The compensation parts, administration salaries as we as
Managing Capital & Financial Assets
04/19/2014
WGU JET2 Financial Analysis
Task 5, Part I - PASSED To: Vice President for Chief Financial Officer (CFO)
The following is a summary report is an analysis of the current financial statements of Custom Snowboards Inc. The company wishes to be considered for an extended long term loan for a European expansion. We have arrived at a selection of key financial statement line items, conducted a risk assessment, and ratios and if the loan is granted, analysis on how to track the progress of the company’s ability to repay the loan.
Financial Statement Analysis
Income statements and balance sheets were reviewed to summarize the following key points that could impact the loan decision. Horizontal, vertical, trend, and ratio analysis were also reviewed to provide a solid understanding of the financial highlights of Custom Snowboards in the areas of profitability, liquidity, and solvency.
Revenue. Revenue includes net sales, cost of goods sold, and gross profit. Gross profit continues to grow at 30.4% with .23%/ $4,900 from year 12 to 13, and .93%/ $19,600 from year 13 to 14. Net sales also showed the same growth at 100%. The company expects continued growth over the next three years and according to the trend analysis, has the ability to do so. This demonstrates the company’s ability to keep overhead under control and maintain constant margin in relation to sales, consistent year after year. The expenses are variable in relation to the sales. Higher gross sales leads to higher operating income available to service debt in the form of interest payments.
Operating Expenses. The increase in utilities and other general and admin expenses should not fluctuate as they are fixed expenses. This should be reviewed to determine if the increase was due to faulty equipment, temporary increase in market costs, or permanent increases. The compensation parts, administration salaries as we as