EXECUTIVE SUMMARY

The purpose of the following report is to evaluate Competition Bike Inc. operations and the possible direction of the company in the next few years. Figures were obtained from comparative balance sheets and profit and loss statements from the relevant years as well as additional information that were forwarded for review. This information enabled the development of percentage and ratio analysis, which was then used to create the report.
Administrative expenses were indirectly related to generating income. Managers usually have more control over administrative expenses than any other cost.
In FY8 when net sales were down, managers had the ability to reduce expenses in this area more easily than in other categories. Administrative costs include professional services, annual meetings, meetings and travel, office supplies, and telephone and market information.
The investigation for FY6, FY7 and FY8 revealed that the company had improved its position compared to previous years. The profitability of the company was significantly better while the liquidity had remained reasonably steady. The solvency of the company had increased, not affecting the long-term obligations of the business.

Horizontal Analysis
Income Statement
Competition Bike sales and profitability has varied widely over the last three years. Net sales between FY6 and FY7 increased to 33% and subsequently falling to 15% between FY7 and FY8. The largest growth rate over the 3 years occurred in FY7 with a 313.4% increase FY7 over the prior year with net earnings of $196,294. This sales decline reflects a decrease in sales activity (number of bicycles sold) or decrease in bicycle selling prices in FY8. Either of these causes had an adverse effect on this years profitability. In a statement provided by management, the decline in net earnings for FY8 were due to decline in orders by