Income Statement

Revenue: In this section Net Sales reveals both weakness that may be cause for alarm and strengths. We can see that strength prevailed in years 6 to 7 with a 33% increase in net sales that show substantial growth for that period, however, it became a weakness in years 7 to 8 with a 15% decrease in sales, which indicates cause for alarm among management. Due to the unique situation of our riders, sales have been affected by the decrease in sponsorships in our depressed economy. This factor should motivate us to diversify our sources of revenue to prevent such decreases in revenue in the future. Another strength in this area falls under COGS, which has maintained steady movement equivalent to sales and shows that we have made accurate projections in our purchasing decisions. A small gap does exist between our sales and our cost of goods that would allow us to realize a small increase in profit if we can reduce our COGS, so we should consider this an opportunity for improvement in this area.

Operating Expenses

Selling Expenses: The advertising budget has increased by 37.5% from year 6 to year 7 that shows strength in this area, and increases the chances of having the brand recognized by professional bike riders. A second strength in this area is the proportional fluctuation between some accounts and net sales that displays control of selling expenses. Aside from the strengths, there are two weaknesses in this area that falls between years 7 and 8. The positive increase seen in the advertising budget in year 6 to 7 became a weakness in year 7 to 8 by decreasing by 16.3%, which adversely affects sales by potentially