1 / 20

Bike Brothers (Firm 1)

Dylan Roth (201102176) Patrick Gormley (201103706) Maclean Patterson (201105266) Kunle Tosin Idris (201101463). Bike Brothers (Firm 1). Sales: $16,033,526 Units Sold: 38,072 Costs: $9,448,743 Profits: $2,071,876 Shareholder Value: $8.76 Earnings per Share: $1.45

chaka
Download Presentation

Bike Brothers (Firm 1)

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Dylan Roth (201102176) Patrick Gormley (201103706) Maclean Patterson (201105266) Kunle Tosin Idris (201101463) Bike Brothers (Firm 1)

  2. Sales: $16,033,526 • Units Sold: 38,072 • Costs: $9,448,743 • Profits: $2,071,876 • Shareholder Value: $8.76 • Earnings per Share: $1.45 • Mountain Bike #1 Price : $748 • Mountain Bike #2 Price: $570 • Mountain Bike #1 Quality: 0.84 • Mountain Bike #2 Quality: 0.84 • Mountain Bike Direct Competitors: RTP Bikes, Firm3, The Capable Jaguars, Mikes Bikes and Pro Bikes Firm overview

  3. Gross Margin was Bike Brothers most consistent from year to year staying at a average change of 41.68% • Finishing 2018 with a 41.59% increase in gross margin. • Total Assets, Total Liabilities and Shareholders’ Equity had a large increase in 2015 going from 160% to 210.81% after 2015 total assets slowly declined ending 2018 at 127% increase. Vertical Analysis

  4. We saw our gross margin increased throughout the 5 years, seeing the largest increase in 2016 after our 2015 introduction of our 2nd mountain bike. • In 2015 we experienced a decrease in total assets, total liabilities and shareholders’ equity of -14% after we saw them start to increase again, increasing in 2018 of 15.57% Horizontal Analysis

  5. According to the ratio solvency Bike Brothers current ratio is in good standing at 16.44% meaning that our company has a high liquidity, Bike Brothers best year for current ratio was 2016 with a ratio of 46.11%. • Debt to equity ratio was considerably low throughout the last 5 years averaging a ratio of.24%, our company has a low amount of debt, and is therefore exposed to less risk in terms of interest rate increases. • Earnings per share was below the industry average of 6.31% as we experienced difficulty early on generating profit in 2015. • Return on equity can help us explain why we were profitable in the latter years. The return on equity deteriorated from .18 in 2014 to .14 in 2018 a difference of .04. Ratio Analysis

  6. In our Horizontal analysis we saw our sales grow the biggest after 2015 of 45.56%, our sales growth slowed down after 2015 to a sales growth of 4.20% during our last year. The addition of the second mountain bike put a hold on our sales for the first year. Sales

  7. We Found in our Vertical Analysis that COGS experienced a constant decrease from 2015 having a revenue cost of $.60 per unit to $.58 revenue cost per unit in 2018. • In our Horizontal analysis Bike Brothers COGS started 2015 with a increase of 45.56 then ended 2018 with a decrease to 3.49% • 2015 being our largest year for COGS being as we inserted our second mountain bike. Cost of goods sold

  8. In our Vertical analysis. We saw profitability decreased from 13.71% in 2014 to a mere 9.05% by 2018. Once again we ran into struggles in 2015 having -5.37% after the insertion of the second mountain bike. • In our Horizontal analysis we saw profits in 2015 start at a percentage rate of -151.16 and decrease significantly in 2016 to -250.43, after 2016 Bikes Brothers slowly regained a positive profit ending with an increase of 30.50%. • Bike Brothers recovered well after a bad 2015 year, having a negative profit of -685,586. • After 2015 we had a steady 3 years of positive profit, increasing each year ending in 2018 with a profit of 1,450,313. Profits

  9. Our Company sales (Adv1) level increased by 7.2% from 19,102 per bike to 20,474 in 2017 to 2018 and it increased more in 2016 to 2017 by 10.8% from 17,236 to 19,102. the sales (Xtreme_2015) level of our second product remain the same at 17600 from 2017 to 2018. • Our (Adv1) price is the second highest sales in the industry and we are 3,726 below the highest sales in the industry. And our (Xtreme_2015) is the fifth highest in the industry with 6,598 below the highest Market analysis

  10. We have the second highest Awareness in the industry with just 0.1 different from the highest firm in the industry with (Adv1) . While (Xtreme_2015) have a low awareness of 0.11 below the highest in the industry. Adv1 promotion (awareness rating) of 0.29 is 0.06 above the industry average promotion rate of 0.23 and Xtreme_2015 awareness rate of 0.18 is 0.05 below the industry average   Continued…

  11. Adv1 and Xtreme_2015 have the same distribution rate of 0.55 is 0.05 above the suggested distribution target We increase our company distribution rate for (Adv1) by 2% by 0.54 to 0.55 in 2017 to 2018. And (Xtreme_2015) also increased by 2% by 0.54 to 0.55 in 2017 to 2018. Continued…

  12. The cost of goods of our firm increased by 3% from $9,049,484 to $9,364,940 in our previous year to our new current year. The firm wastage decreased by -30% from 10% to 7% in previous year to this current year Our firm cost of goods of $9,364,940 is $220,099 below the industry average cost of goods of $9,585,039 Operations analysis

  13. Consistently showed profit over 1 000 000 4 out of 5 years • Profit of $1 031 293 in 2016, $1 111 333 in 2017 and a 30.5% increase to $1 450 313 in the 2018 period • Highest Share of mountain bike market (26.4% of total sales in 2018 • Share growing around 1% per year • Both bikes hold High PR & Distribution ratings • .11 PR rating highest in simulation • .55 Distribution tied both for second • Sold all available inventory for Xtreme 2015 and effectively undercut competitors in market • Price of $570 compared to market average $709 Strengths

  14. Low Shareholder Value • Just $8.76 in 2018, second lowest in the simulation • No presence in other product markets • Poor sales projections and inventory led to excess inventory for first product and excess demand for second • 6238 estimated lost sales 2018 • Low net assets compared to competitors • $10,220,398 in 2018 compared to average $18,347,873 • Profit after tax below average • $1,450,313 in 2018 compared to average $5,559,543 • Low cash balance • $9 360 333 in 2018 compared to the market average of $16 007 890 weaknesses

  15. Increase production and support of our second product, Xtreme 2015 • 6238 in lost sales 2018 • Can increase price and still undercut competitors • Increase Shareholder value by issuing dividends • Reduce idle time by better allocating resources • 13% idle time 2018 • Decrease % of each sale we give to retailers • Currently giving 37%, the highest in the simulation world • Attempt to enter new market taking advantage of price skimming strategy • Competitors already established, less risky than predatory Opportunities

  16. Other firms have much higher working capital • Average cash for top 3 firms 2018 is 27 395 147 • More ability to take financial risk • All competitors already in the mountain bike market • Reduced barriers to entry, existing brand and product reputation • No diversity in revenue streams • Profits completely reliant on success within mountain bike market threats

  17. Our Plan… Quality over quantity Customer satisfaction Be innovative Make smarter decisions Objectives & Recommendations

  18. Financing • Increase our sales by 10% (20 million) • Have a net profit increase of 30% (2 million) • Increase our share value by: • Reducing cost base while maintaining revenue • Increase revenue share and reduce cost. Objectives & Recommendations

  19. Marketing • Launch a new product • Youth Bike • Road Bike • Increase our advertisement expenditure • Increase our supply by 8% Objectives & Recommendations

  20. Operations Maintain our efficiency level and quality index Decrease our COGS Introduce intellectual property Objectives & Recommendations

More Related