Competition Bikes: Coursework



Competition Bikes: Coursework

Introduction

The aim of this task is to evaluate the financial performance of the company named as Competition Bikes Inc. The first part of the task focuses on conducting the detailed analysis of the company with respect to determination of strengths and weaknesses financially. The second part of the task covers the significance of working capital in company's operations and identifies the working capital of the given organization. The third part of the report analyzes the internal controls of the organization and assesses the loopholes in it. We have also prepared certain recommendations based on the analysis of the company's operations and risks faced by it. In addition, the corrective action plans have been prepared as well to address the identified risks and weaknesses of the given organization.

Introduction to Company

Competition Bike Inc. is engaged in making bicycles for professional users for racing purposes. As per records, 60% of users of these bicycles have mostly won the races and around 10% of fresh users in the marathons make election of using these bikes every year. The main key strategy of promoting these bikes is word of mouth technique due to marvelous and higher success rate associated to bike racing.

Competitors

The important competitor of Competition Bike Inc. is Two Wheel Racing Inc. and it is the only one competitor of this company. The bikes produced by Competitor Company are some ounces heavier and manufactures the chain driven items. It is also listed on Stock exchange and would be used in comparing the financial performance of the Competition Bikes Inc.

History of Company

The Competition Bikes Inc. initiated its operations in 2001 by Larry Fergnson, who was an aggressive bike racer. Larry began from forming a heavy and fast bike at his garage to rock the world of bike racing by determining the most demanding aspects of bikes by racers in this field. It gradually made its way to financial success in the market. The company got listed itself in stock exchange after three years in order to raise required capital for building manufacturing plants. The company earned 40% of returns on its shares and a high profit margin.

Products

The organization is engaged in producing durable, reliable, light weight bike frame and component bicycles in the market. The company is consistently involved in improvising its products with the assistances of research and development team to combat competition in the market and produce highly improved and quality bikes. The company is currently focusing on its latest product named CarbonLite, which is alight weight, customized bike built as per the customer's unique physical attributes and possesses drive shaft technology.

Financial Analysis of Competition Bikes

Horizontal Analysis of Balance Sheet

The Horizontal Analysis Tab given in the spreadsheet shows that Cash and cash equivalents has a negative trend from year 6 to year 7, it decreased by 64.4% due to heavy investments in accounts receivables and major chunk of cash and cash equivalents is invested in inventories. The cash and cash equivalents for the year 7 and 8 ...