Financial Analysis Task 5 Wgu Essay Example

Financial Analysis Task 5 Part B-Report to CEO B1. Custom Snowboards sales history has been steadily increasing per the table below. CSI has had small growth in sales with an equal increase in COGS. The COGS is relative to the increase in the net sales, however, CSI should look further into ways they can decrease their COGS line item in order to see more profit growth from year to year. We can see on the Horizontal Analysis below that net sales, COGS and Profit all had the same increases from years 12 to 13 and from years 13 to 14. This is indicative of CSI needing to do more cost based analysis to see where they can make production cost cuts and boost sales. Per the data, operating costs also increased alongside the net sales. Items such as transportation, sales commissions (which would have increased with net sales), and advertising all increased from years 12 to 14.

Horizontal Analysis
Year 14 REVENUE: Net Sales Cost of Goods Sold Gross Profit 7,357,700 5,118,400 2,239,300 Year 13 6,697,600 4,659,200 2,038,400 Year 12 6,552,700 4,558,400 1,994,300 Years 14 and 13 Change % Inc (Dec) 660,100 9.86% 459,200 9.86% 200,900 9.86%

Horizontal Analysis
Years 13 and 12 Change % Inc (Dec) 144,900 2.21% 100,800 2.21% 44,100 2.21%

General and Admin expenses had a few red flags. Administrative salaries increased by an impressive 18.36% combined over years 12 to 14. This increase is significant enough that it needs to be evaluated by management. While yearling increased are to be expected, based on the stagnant increases in net sales, the admin salaries appear to be inflated. Utilities had very little change. CSI has a good plan in place for preserving utility resources. Research and development had no change which could be an indicator as to why sales have not had any major increases. While we give CSI a back slap for the steady increase in net sales, we believe that CSI could have much more growth if it examines these expenses. CSI needs to be sure it is producing