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Jet2 Task 5

In: Business and Management

Submitted By acaciak57
Words 7352
Pages 30
With the sales growth and expected continual growth in Europe, Custom Snowboards, Inc. is considering an expansion into Europe. The company has two options for expansions; to build a new manufacturing facility or to merge/acquire the operations of an already established European manufacturer called European Snow Fun. In order for an acquisition to work, the company would need a loan from the bank for one million dollars.

A1. Looking at the financial aspect of the company, there are a few key points that could affect a bank officer’s decision. The bank officer would need to figure in on how the company would be able to pay the debt back. The vertical analysis shown in the financial statement shows how the base amount in relation to the particular items. There are a few main points to gather from the vertical analysis. The first one we will take a look at is the net sales of every year. In year 2012, the net sale was $6,601,000 with a gross profit of $2,009,000. In year 13, we saw an increase to $6,633,200 in net sales with a gross profit of $2,018,800. However, we see some concern when taking a look at year 14. The sales declined by $225,400 compared to year 13, while gross profits took only a slight decline of $68,600. It seems that this was due to the fact that they were cutting back on operating expenses compared to the previous years. In year 12, the total selling expense was $779,000, in year 13 it was $782,800, and in year 14 they dropped it down to $756,200. In year 12, they showed the current assets as $738,690. However, in year 13 the current assets jumped to $880,950, while in year 14 there was a significant drop down to $740,155. Although a significant drop, it was still $1,465 more than the total assets of year 12. The net equipment and property appear to remain fairly steady, with a drop of $100,000 in year 13 but went back to the $1,000,000…...

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