Fraser White Zac Hannam Andrew Graham Nick Parker Spoke City …Any Distance is Biking Distance

Overview Sales of almost $13,000,000 Costs of goods sold just under $6,000,000 Profit of almost $2,500,000 Shareholder value of $26.04 Earnings per share $ ,349 units sold

Sales Revenue $12,998,862$12,716,405$14,786,655$9,213,750$8,589,750 Cost of Goods Sold $5,945,751$5,848,518$ $ $4,004,826 Gross Margin $7,053,112$6,867,887$8,010,841$ $4,584,924 Expenses$3,939,256$5,109,010$3,819,338$2,167,230$2,034,120 Net Income$2,409,791$1,435,128$3,098,150$2,052,273$1,876,734 Income statement

Sales Revenue 100% Cost of Goods Sold 45.7%46.0%45.8%46.5%46.6% Gross Margin 54.3%54.0%54.2%53.5%53.4% Expenses30.3%40.2%25.8%23.5%23.7% Net income18.5%11.3%21.0%22.3%21.8% Vertical Analysis of Income Statement

Sales Revenue 2.2%-14.0%60.5%7.3%4.0% Cost of Goods Sold 1.7%-13.7%58.2%7.0%-6.0% Gross Margin2.7%-14.3%62.5%7.5%14.7% Expenses-22.9%33.8%76.2%6.5%-1.2% Net Income67.9%-53.7%51.0%9.4%32.0% Horizontal Analysis of Income Statement

Balance Sheet Current Assets$18,067,015$15,131,895$14,290,071$10,610,313$8,335,187 Non-Current Assets $968,551$1,076,168$1,195,742$1,328,602$1,476,225 Total Assets$19,035,566$16,208,063$15,485,813$11,938,915$9,811,412 Current Liabilities$1,032,767$615,055$1,327,933$879,546$804,315 Non-Current Liabilities $1,000,000 Total Shareholders Equity $17,002,799$14,593,008$13,157,880$10,059,370$8,007,097 Total Liabilities and Shareholder’s Equity $19,035,566$16,208,063$15,485,813$11,938,915$9,811,412

Horizontal Analysis of Balance Sheet Current Assets19.4%5.9%34.7%27.3%50.1% Non-Current Assets -10.0% -32.5% Total Assets17.4%4.7%29.7%21.7%26.8% Current Liabilities67.9%-53.7%51.0%9.4%32.0% Non-Current Liabilities 0.0% Total Shareholders Equity 16.5%10.9%30.8%25.6%30.6% Total Liabilities and Shareholder’s Equity 17.4%4.7%29.7%21.7%26.8%

Current Assets94.9%93.4%92.3%88.9%85.0% Non-Current Assets 5.1%6.6%7.7%11.1%15.0% Total Assets100% Current Liabilities5.4%3.8%8.6%7.4%8.2% Non-Current Liabilities 5.3%6.2%6.5%8.4%10.2% Total Shareholders Equity 89.3%90.0%85.0%84.3%81.6% Total Liabilities and Shareholder’s Equity 100% Vertical Analysis of Balance Sheet

Current Ratio Debt-to-Equity Ratio Earnings Per Share $2.41$1.44$3.10$2.05$1.88 Return on Equity14.2%9.8%23.5%20.4%23.4% Ratio Analysis

$14,786,655 was Spoke City’s greatest sales revenue, it was generated in the year 2016 Drop of sales of 14% from 2016 to 2017 Sales Growth of 2.2% from 2017 to 2018 Key Findings – Sales Growth

The year 2018, Spoke City had their lowest cost of goods sold, as a percentage of sales, sitting at 45.7% Cost of goods sold increased by 1.7% from 2017 to 2018 Key Findings – Cost of Goods Sold

Return on Equity decreased dramatically from 2016 to 2017, but increased from 9.8% to 14.2% from 2017 to 2018 Sales have increase by 51% in the last five years Net Income increased by 67.9% from the year 2017 to 2018 Key Findings – Profitability

Spoke City introduced two new products, a Youth bike, and a Road bike Main source of income was supplied by Mountain bike (57%) Spoke City had the lowest capacity in the industry with a capacity of only Marketing Results

Spoke City recorded 0% idle time in 2018, the industry average was 7.7% Spoke City recorded a wastage of 14.4%, the industry average was 17.6% Spoke City’s product quality index was 75%, the industry average was 85% Operations Results

Strengths: Decreasing Debt-to-Equity Constant Profitability Increasing sales Efficiency Weaknesses: Shareholder Value Awareness rating Product Quality Capacity Threats: Competitors Clustering of competitors Opportunities: New product options SWOT Analysis

Decreasing debt to equity After our first year we had a good ratio of 0.47, which shows investors that we would not be a risky company to invest in. Since that year our debt to equity ratio has gradually decreased to what it is now, 0.12 after the year Constant Profitability Our company generated a profit of $ in our first year, and since then our profits have been increasing, aside from 2017, the year after our best year where we generated $ in Last year we had profits of $ which was up fro, 2017 by $ Increasing Sales Like our profits, our sales have been increasing since year one aside from 2017 after our best year and we expect sales to continue to increase as we grow. Efficiency Our firm became very efficient through the years Our idle time was 0% compared to the industry average of 7.7% and we had a wastage of 14.4% which was 3.3% lower than the industry average. The more efficient our firm can be the more money we will save, maximizing our potential for profit. Strengths

Shareholder Value Currently our shareholder value sits at $26.04 which is less than half of the industry average of $ Awareness Rating Of the six companies we have one of the lowest brand awareness ratings in the industry. We are very close with five of the companies though much below that of X-treme Bikes. Product Quality The three bikes that our firm chose to sell are the Adv1, Funksta_2016 and the Annihilator_2017. These three bikes have some of the lowest product quality ratings around The highest rated bikes are the Bolt_2016 and the NinjaX_2016 which are around Capacity In 2017 our firm’s capacity was , this was below the highest of Extreme Bikes and Michael’s Bicycles. This was a major weakness for our firm as it restricted us from being able to meet the demand of our customers. Weaknesses

New Product Options There are many new products available for our company to begin selling that could help generate more income. The Bolt_2016 and NinjaX_2016 are both very popular bikes with the highest product quality ratings. The NinjaX_2015 was also the most selling bike in the industry recording a total of sales. Opportunities

Competitors We are in a very competitive industry with there being five other companies selling similar products. The two biggest competitors are Michael’s Bicycles and X-treme Bikes whom control the majority of the market, having a combined market share of 61%. Clustering of Competitors Aside from the two majority market holders, there are four other companies competing to find an edge and have a larger proportion of the market. The four companies range from having a 4.3% to a 16.9% market share. Threats

Objectives: To improve market share by 3-5% for each of the firms next five years  Current market share of 10.3% based on retail dollar sales (4 th in world 3) Continue to increase sales for each of the next five years  Except for 2017, sales have increased every year since Spoke City has opened  Sales in our first year (2011) were $8,190,000 and have increased to $12,998,862 by the year Recommendations: To improve market share by 3-5% for each of the next five years the firm must:  Increase overall production by 5-10% per year  Better forecast demand so firm has inventory and doesn’t miss out on sales. To continue to increase sales for each of the next five years the firm must:  Continue to advertise our product effectively  Continue to increase the quality of our product Objectives and Recommendations - General

Objectives: Increase sales of Mountain Bikes by 10% by the year  Second lowest sales of Mountain Bikes in world 3  Firm’s Mountain Bike price was $139 above average market price  Second highest Mountain bike quality in world 3. Increase sales of Youth Bikes by 20% by the year  Lowest firm in terms of sales of Youth Bikes in world 3 in 2018  Only 10% of the Youth Bike market share in world 3 Recommendations: To increase sales of Mountain Bikes by 10% by the year 2020 the firm must:  Lower the quality of the Mountain bike  Lower the price of the Mountain bike to average market price  Increase internet advertising of the Mountain Bike by $100,000 To increase sales of Youth Bikes by 20% by the year 2020 the firm must:  Increase public relations through TV, Internet and Magazines by $300,000  Increase advertising by $100,000 and target the teen generation Objectives and Recommendations - Finance

Objectives: Increase the firms Awareness to 0.20 for Mountain, Road and Youth bikes by the year 2020  The awareness of Spoke City’s products is the lowest in world 3  The awareness sits at 0.11 for Road Bikes, 0.21 for Mountain Bikes and 0.19 for Youth Bikes Increase public relations on our road bike to 0.30 by the year 2019  In 2018 our PR was 0.05 for mountain bikes, compared to the market average of 0.39  In 2018 we spent $660,000 on Mountain Bike public relations Recommendations: To increase the firms Awareness to 0.20 for Mountain, Road and Youth bikes by the year 2020 the firm must:  Increase brand advertising by 150,000 To increase public relations on our road bike to 0.30 by the year 2019 the firm must:  Increase the amount we spend on public relations from $660,000 to $1,000,000 Objectives and Recommendations - Marketing

Objectives: Keep production allocating over 85% of the firms capacity for the next five years  2018 was the first year Spoke City has had over 85% of the firms capacity allocated to production  For the last three years Spoke City has had zero idle time and kept wastage below 20% Start producing a new Mountain Bike, the Hopper, in 2019  Market opportunity  More options for customers Recommendations: To keep production allocation over 85% of the forms capacity for the next five years the firm must:  Increase efficiency by $200,000  Increase capacity by $7,000 To start producing a new Mountain Bike, the Hopper, in 2019 the firm must:  Inquire new investors  Keep an increase of net income Objectives and Recommendations - Operations

Spoke City: Any Distance is Biking Distance