Financial Analysis - Task 2



Financial Analysis - Task 2

Summary Report

Introduction

Competition Bikes, Inc. manufactures bicycles for professional riders as well as for other highly accomplished users who need bicycles for competing in bike racing, biathlons, and triathlons. Information reveals that the bicycles designed by the Competition Bikes, Inc. has been the victory leaders of approximately 60 percent of all race winners, which is a remarkable rate of success that has been under consideration of racers and bicycle riders and becomes the reason for company's exponential growth. Competition Bikes, Inc. was founded by Larry Fergusan in 2001, and it is best known for its quality products and is the leader in the marketplace with the CarbonLite items they offer. Company's budgets reveal same successful standing of the company since last few years; however, the current budget of the company indicates certain unfavorable variances which point out that some improvement are required in the operations of the business to keep the company leading in market. Where, the budget is aimed to summarize as well as incorporate the whole budget of the firm. Companies prepare and use budgets in order to determine the current financial performance and position of the company, what the targets of a company are, and what strategies must be developed and adopted for accomplishing those targets. Therefore, in order to analyze the financial position as well as financial performance of the Competition Bikes, Inc. for improving the variances, analysis of company's budgetary items and flexible budget is conducted by comparing the master budget projections with the actual outcomes by the end of the year.

Discussion

Budgetary Concerns

The budgetary areas of Competition Bikes, Inc. that raises the concern in the budgetary planning for year 9 are quite interesting as analysis of those point outs the areas where organization information is lacking in terms of presentation as well as content. Thus, the most highlighted areas that raise concerns are discussed below.

Companies must always divide their quarterly budgets into quarters, particularly those dealing in automobiles like sport vehicles, as quarterly budgets facilitates in analyzing and evaluating the quarterly activities. This product bicycle normally practices outdoors and therefore they are based on weather, which indicates that their demand fluctuates with the season. So, the trend of bicycles escalates with season; therefore it is essential to develop a quarterly schedule that highlights sales and projections, since these two are the major items. Research suggests that even the professional bicycling and their competition as well as normal bicycling by citizens escalates when weather is good and declines in days of worst weather. Thus, it clearly suggests that company must focus on quarterly activities in order to locate the peak seasons as well as the dip seasons, which can facilitate the firm in further enhancing its trend of bicycle from previous year or quarter. In addition to this, company can also become efficient in terms of its inventory management, as it can purchase more inventories for peak seasons in order to meet the demand of the ...