Sonja Sweet, Justine Rancy, Brett Melnick and Scott Cameron

Sonja Sweet, Justine Rancy, Brett Melnick and Scott Cameron

Mountain Bikes- Low Price/High Quantity◦ Direct Competitors

Lane Bikes

Youth Bikes- Close to target price◦ Competitors

Lane Bikes (2016) Bikes Inc. (2017)

A Statement of the Firms Strategy

Relatively Steady/Average Results Third in:

◦ Shareholder Value◦ Sales (Mountain Bikes)

Gross Margin: $6,543,315 Shareholder value of $24.04 Sales revenue of $15,911,305 Gross margin of $6,543,315 Profit of $2,671,204

A Statement of the Firms StrategyDirect Competitors

2018 Bikes Inc. Cyclo Bikes

Lane Bikes

Aspire Bikes

Wheels of

FortuneIndustry Average

Sales Revenue $21,216,436 100% $27,442,303 100% $12,840,204 100% $13,780,330 100% $15,911,305 100% 100%

Cost of Goods Sold $11,619,331 55% $9,402,320 34% $6,280,988 49% $5,676,022 41% $9,367,990 59% 48%

Gross Margin $9,597,105 45% $18,039,983 66% $6,559,216 51% $8,104,308 59% $6,543,315 41% 52%

Profit After Tax $3,740,870 18% $10,184,954 37% $1,539,510 12% $1,584,241 11% $2,671,204 17% 19%

Vertical Analysis of Income Statement

Horizontal Analysis of the Income Statement and Balance Sheet

2018

2017

2016

2015

2014

Sales Revenue $15,911,305 $15,168,351 $12,192,010 $8,218,502 $8,615,854

Change in Sales $742,954 $2,976,341 $3,973,508 ($397,352) ₋

Percentage Change in Sales 5% 24% 48% -5% ₋

COGS $9,367,990 $8,274,326 $6,731,932 $4,724,247 $4,961,896

Change in COGS $1,093,664 $1,542,394 $2,007,685 ($237,649) ₋

Percentage Change in COGS 13% 23% 42% -5% ₋

Profit after tax $2,671,204 $2,813,078 $1,471,922 $1,084,914 $1,223,149

Change in Profit after tax ($141,874) $1,341,156 $387,008 ($138,235) ₋

Percentage change in profit after tax -5% 91% 36% -11% ₋

2018 2017 2016 2015 2014

TOTAL ASSETS $17,733,987 $15,770,558 $12,571,275 $10,945,490 $9,919,819

Change in total Assets $1,963,429 $3,199,283 $1,625,785 $1,025,671 -

Percentage change in total assest 12% 25% 15% 10%-

Current ratio of 11.7:1 Debt to equity ratio of .11:1 Return on equity ratio of .17:1 Return on sales ratio of .17:1 Earnings per share of $2.69, below the industry average

of $3.97

Wheels of Fortune is solvent in the short term and long term

Ratio Analysis for Wheels of Fortune

Mountain Bike segment of the company◦ Wheels of Fortune sold 26,830 bikes, placing third in terms of

sales◦ Lowest PR Rating of .11◦ Second lowest Awareness Rating of .21◦ High distribution Rating

Youth Bike segment of the company◦ Awareness rating of .16◦ PR rating of .05

Marketing Results

Mountain Bike segment of the company◦ Lowest Quality Index◦ Raised capacity but did not improve efficiency◦ High wastage throughout the firms

Children’s bike segment◦ Lowest Quality index◦ Sales of $41,268

Operations

SWOT AnalysisStrengths and Weaknesses

Strengths Weaknesses• Strong Cash position• Second in industry for Cash

• Low Quality index• 0.54

• High Profit • $2,671,204 Profit

• High Wastage• 40%

• Cost Leader (Mountain Bike) • Poor Demand forecast

• Low Idle Time • High Cost of Goods Sold %

• High Sales for Youth Bike• $41,268

• Low Awareness

• Good Distribution performance for Youth bike

• 0.54

• Low distribution performance for Mountain bike

• 0.35

SWOT AnalysisOpportunities and Threats

Opportunities Threats• Can buy shares back because

of strong cash position• Issue more dividend per

share

• Bikes Inc. is a threat with a lower Retail Price in both Mountain and Youth bikes

• High CPU therefore we can make a large amount of bikes

• Bikes Inc. has higher sales

• We have low advertising so we have the opportunity to increase advertising and increase sales

• Better Quality for both Mountain Bike and Youth Bike

• Capitalize on the shortage of bikes in both the Mountain and Youth bikes.

• Bikes Inc. also has higher Awareness rating

SWOT AnalysisPositioning Map and Market Potential

Wheels of Fortunes plans for the next 2 years if to increase it’s shareholder value by $10, giving a value of $34.04, for this to happen we must address Large surplus of Cash Low awareness Opportunity to change price Distribution for mountain bikes is too low High wastage margins

Recommendations for the Future

Large Surplus of Cash Currently have $13,236,320 2nd in industry Options to repurchase stocks Options to increase the Dividend per share


Low Awareness Awareness ratings for mountain bikes are .04 too low,

and for youth .14 too low. Increase Total Advertising to $2,155,000 Follow media channels more correctly Raise mountain bikes to $855,000 Raise Youth Bikes to $1,300,000


Opportunity to change price Lane Bikes increased their price from $520 to $560 Next closet company is Bikes Inc at $555 $45 gap between Bikes Inc and Wheels of Fortune We have the opportunity to increase our price


Distribution for Mountain bikes is too low Distribution for mountain bikes is .15 under the

recommended Increase distribution support to sports stores from

$25,000 from $15,000


High Waste Margins Waste Margin are 2nd highest in the industry at 40% Industry average is 29% when recommended is 1-10% Increase efficiency to $3,500,000 for 2 years to offset

this problem


Wheels of Fortune is has been operating under its full potential

We believe Wheels of Fortune is in a good position for continued growth

Conclusions

Documents

Sonja Sweet, Justine Rancy, Brett Melnick and Scott Cameron