COMPETITION BIKES, INC.

COMPETITION BIKES, INC.



Trend analysis

The trend analysis is a commonly used statistical method, commonly used by the financial managers to analyze and determine the performance of the company with reference to different bases such as the previous year, and or any particular figures like sales, production cost and operational cost. It is used to determine the equation that best fits the data in a scatter plot and aids management for decision making purpose. (Mark, 2009)

Trend analysis has several values:

It identifies the optimal operating conditions

The qualitative understanding and interpretation of the relationships of the variables.

Forecasting.

Trend analysis is commonly used by management to determine the optimal condition for operations with the help of an equation that establishes a relationship between independent and dependent variables. The equation of the trend line provides an understandable measure of the variation and change resulted in the output by changing independent variable (input). The use of the principle provides the forecasted effects of change in the process.(Belverd, 2007) Trend analysis is a natural outgrowth of process analysis and the other product and process control tool. Much of the work required for trend analysis is already accomplished during process analysis and in utilizing the other product and process control tools.

The trend analysis of the Competition Bikes, Inc. has shown a positive future growth. The net sales increased in the 7th year with a percentage of 133.3%, while in the next 8th year the net sales were low and the percentage decreased from 133.3% to 113.3%. (Mark, 2009)The anticipated trend analysis of the Competition bikes, Inc. for the years 9, 10 and 11 is further calculated with year 8 as a base year. The forecasted trend analysis of the next three consecutive years have shown a slight increase in the net sales which are as follows

103.2% increase in the 9th year

107% increase in the 10th year

111.8 % increase in the 11th year.

The overall past and future expected performance of the company is positive. Although year 8 was not that good for the company from the financial perspective as the company witnessed a sharp significant decline of 20% in the net sales.

Ratio analysis

The ratio analysis involves comparisons. Different ratios of the company are calculated with the given data of the company from (financial statements and balance sheets). (Frank, 2003)The ratio analysis provides in-depth and timely information to the management for critical strategic decision making. Different ratios are calculated ...