Jet Task 5

Hope David

JET2 Task 5

Custom Snowboards, Inc. Report

A1.   Key Points

The key points noted in the income statement of Custom Snowboard Inc. that shows the company’s liquidity, solvency and profitability are in gross profits, operating income expense net earnings and operating income. While we look at the balance sheet we will also note there were changes to the current assets which include cash and cash equivalents and short-term investments;   the current assets of   accounts   and notes payable; total long-term liabilities, and total liabilities and equity.

The income statement of the vertical analysis shows that during year 12 the company’s gross profit was $2,009,000 and rose to $2,018,800 in year 13 but decrease slightly in year 14 to $1,950,200.   It shows that the gross profits remained constant throughout the year 12 to year 14 at 30.4%.   This also shows the company maintaining a consistent margin each year with the cost of goods sold remaining at 69.6% between years 2 to year 4. The company has demonstrated that they have maintained their cost of overheard with the same proportion to the increase in sales. This increase in gross profit is a reflection of the consistent 100% net sale for the three year period.   This therefore, indicate that the company have a strong potential for the future growth of its product.

The net earnings of Custom Snowboard Inc. dropped to $95,900 in year from $140,250   in   year 12 and   continue   to drop   down to in year 14 to $16,725   This shows a 0.6% decline from year 12 to year 13 and   again decline   from year 13 to year14 by 1.2%.   Increases in administration and executive compensations are the major factors that caused the decreases in net earnings.   As the company continue to grow, the compensations for administrative staff and executive also grew as they have to ensure they have staff that are knowledgeable to maintain the steady growth in net sales.   With the decrease in net earnings, this could mean the...