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Corporate Financial Analysis Case Study

You are a recent MBA graduate and are tasked with reviewing the Income Statement and Balance Sheet trends for Competition Bikes Inc. (Please see the attachment.) Discuss the companies strong and weak points with the balance sheet and income statement. List any sources you may have used to support your analysis.

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Income Statement

Strong points:
1) Between years 6 and 7, net sales and gross profit increased 30%.
2) COGS decreased 15% in year 8.
3) Operating income more than doubled between years 6 and 7.
4) EBITs quadrupled between years 6 and 7.
5) Net earnings quadrupled between years 6 and 7.

Weak points:
1) Flat net sales and gross profit in year 8.
2) COGS increased 30% between years 6 and 7.
3) SGA costs increased 20% over 3-year span.
4) Operating income decreased 70% in year 8.
5) EBITs declined nearly five times in year 8.
6) Net earnings declined five times in year 8.

Balance Sheet

Strong points:
1) Strong ...

Solution Summary

Solution is comprised of an analysis following 3-year trending for Competition Bikes, Inc. balance sheet and income statement. Also includes key financial ratio analysis.

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