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Wgu Financial Task 2

Decent Essays

Running head: CUSTOM SNOWBOARDS 1
Custom Snowboards
Western Governors University
CUSTOM SNOWBOARDS 2
Custom Snowboards
A1. Key Points
Custom Snowboards, Inc. is interested in securing funding to expand into the
European market. Financial statistics have been provided within this report to discuss the feasibility of this expansion. To fund the project, Custom Snowboards wishes to secure capital debt of $1,000,000. Custom Snowboards has seen considerable growth in the percentage of sales and substantial increase in revenue. They expect future sales to continue to rise, which would be beneficial to the lender and Custom Snowboards.
A horizontal analysis will be reviewed and will reveal the Custom Snowboards financial position …show more content…

Cash and Cash Equivalents
Shares and bonds that can be easily converted into cash are considered cash and cash equivalents. This converted cash is then immediately available for use. Custom
Snowboards had a cash and cash equivalent of 83.8% during year 12 and year 13, but that dropped to 7.2% in year 13 and year 14 since sales dropped during that period of time.
This would be a concern for Custom Snowboards and indicates they may not have the
CUSTOM SNOWBOARDS 5 assets available to keep immediate cash flow available, especially if sales are not as expected in Europe.
Total Current Assets
$142,260 or 19.3% represents the total current assets of Custom Snowboards during year 12 and year 13. However, in year 13 and year 14 total current assets fell
16%. This is a concern for Custom Snowboards since the company must have enough assets to fund operations and pay expenses. Continued low sales and limited assets is a concern for lenders and poses the question if Custom Snowboards would be able to meet its financial short-term obligations.
Solvency
Custom Snowboards appears to be financially solvent from the review of the income statement and balance sheet. Custom Snowboards has reduced liabilities and maintained consistent repayments to reduce long-term financial obligations. This is strength for Custom Snowboards since they saw sales drop.
Long-term Liabilities

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