Abel Athletics Strategy, Risk Factors, Analysis, and Competition
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Abel Athletics is preparing to release its first Annual Stockholder Report since the company's recent initial public offering (IPO). The accounting department has already prepared and provided the financial statements and ratios (see below) for the most recent year. Now all the division managers are meeting to help create the written analysis portions for the annual report keeping in mind all the stakeholders who will be reading this information. (i.e.,shareholders, regulators, investors, security analysts, credit rating agencies, etc.) Using what you know about Abel Athletics from the scenario above, the financial documents, and details from your previous tasks, create Abel Athletics' first Annual Stockholder Report for its' stakeholders. Provide as much detailed analysis as possible to your shareholders for each of the following areas, keeping in mind how the users of this information are likely to use it:
- Summarize the nature of the firm's business and its business strategy
- Assess the internal and external risk factors for the firm
- Provide an analysis of the financial condition for the firm
- Evaluate the firm's credit worthiness
- Discuss the competitive position of the firm
- Summarize the financial and accounting control procedures in place to ensure compliance with applicable regulatory agencies
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This solution assists with strategy and business analysis for Abel Athletics.
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DIRECTORS REPORT
Your Directors are pleased to present the First Annual Report on the business and operations of your Company and the audited accounts of the Company for the year ended 31st December, 2006.
FINANCIAL RESULTS
2006
Net Sales $8,994,000
COGS (not including depreciation) $3,759,600
Gross Profit $5,234,400
Expenses
SG&A $1,245,900
Depreciation Expense $350,000
Total Operating Expenses $1,595,900
Income Before Interest & Taxes $3,638,500
Interest Expense $250,000
Income Before Taxes $3,388,500
Income Tax Expense $1,016,550
Net Income $2,371,950
NATURE OF THE BUSINESS AND THE BUSINESS STRATEGY.
The Company is mainly engaged in the manufacture of equipments used for the athletics .The Company has made demand analysis for the equipments not only in our country but also in various other countries especially in Europe and in Central Asia.The export sales in the current financial year constitute 20% of the total sales. Market demand analysis reports indicate that there is still untapped demand both in domestic market and in the Asian market. In order to tap the demand, the company is planning to open more factory outlets for the increase in production and also it is planning to appoint the distribution agents to sell the company's products in the untapped areas. For opening more ...
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