JET 2 Task 5, Financial Analysis
CFO Report
Shawn Stokes
Western Governors University-Indiana

A. CFO Report
1. Summarization of key points that could affect bank officer’s decision
The first thing you notice in the HA is the relationship between revenue and the selling expenses. The selling expenses are variable and rise and fall with revenue. In both years they are in lockstep, 3.21% in between Years 12 and 13 and 1.91% in Years 13 and 14. The general and admin expenses show some areas of concern, being generally fixed expenses, they should be consistent from year to year. There are four expense categories that need further research: Admin Salaries, Executive Compensation, Utilities, and Other GA Expenses.
Executive Compensation acts more as a variable expense since the compensation is tied to performance. As sales go up, the executives should be rewarded and it shows in the Income Statement. The Utilities Expense may be just a blip in Years 13 and 12 as they rose 7.14%. It is more than likely some inefficient equipment. The decrease in utilities goes hand in hand with the raise in Equipment, in the long term assets located on the Balance Sheet, which occurred in Years 14 and 13. The other two accounts, Admin Salaries and Other GA, need serious attention. Admin has ranges from 4.76-13.64%. Other 31.12-7.59%.
The operating income, -11.98 and -19.20%, suffers because of the GA expenses being between 6-7% higher per year. This results in almost $140,000 more in expenses. The Interest Income shows big variances but the numbers are minute compared to the totals. The differences come from short term investments being made then cashed-in.
The earnings and net earnings are trending alarmingly in the wrong direction. 14 and 27% losses should be seriously analyzed. $50,000 in losses over the two years are a cause for concern