Competition Bikes, Inc. is a publicly traded company whose main business is to manufacture and sell lightweight racer bikes. In recent years, the company has enjoyed steady growth due to the company's perceived product superiority among professional riders supported by a statistic that shows that sixty percent of all race winners had been riding a Competition Bikes, Inc bicycle. Although the company has marketed its products aggressively using this strength, it faces intense competition from Wheel Racing, Inc, which in addition to having a huge financial base makes equally good lightweight frame bicycles, as does Competition Bikes, Inc.
This paper will carry out an analysis of the company's financials to identify the company's strengths and weaknesses. Financial Statement Analysis for Competition Bikes, Inc Financial statement analysis
Liquidity ratios measure a company’s ability to meet its maturing short-term obligations. In other words, can a company quickly convert its assets to cash without a loss in value if necessary to meet its short-term obligations? Favorable liquidity ratios are critical to a company and its creditors within a business or industry that does not provide a steady and predictable cash flow. They are also a key predictor of a company’s ability to make timely payments to creditors and to continue to meet obligations to lenders when faced with an unforeseen event.
Current Ratio Current Assets / Current Liabilities This ratio reflects the number of times short-term assets cover short-term liabilities and is a fairly accurate indication of a company's ability to service its current obligations. A higher number is preferred because it indicates a strong ability to service short-term obligations. The composition of current assets is a key factor in the evaluation of this ratio. Depending on the type of business or industry, current assets may