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Management

Information System
Assignment 01

Prepared For
Dr. Syed Faisal Hasan

East West University


41, Mohakhali, Dhaka
Bangladesh

Prepared By
Ragib Ahmed Siddique

Id# 2008-2-95-098
Management Information
System

Assignment 01

Analyzing Financial Performance of


Dirt Bikes USA
1. What are Dirt Bikes’s best- and worst-performing products? What is the
proportion of domestic to international sales? Have international sales grown
relative to domestic sales?

Ans:

1.1. Dirt Bikes’s Product Performance


To determine the best and the worst-performing product according to sales, it is necessary to
analyze the Annual Sales of Dirt Bikes Model.

The annual sales of Dirt Bikes models from 2000 to 2004 are:

2000 2001 2002 2003 2004


Enduro 250 1201 1663 2291 2312 2195
Enduro 550 2832 3290 3759 4078 3647
Moto 300 1755 1932 2454 2615 2627
Moto 450 463 598 661 773 823
TOTAL 6251 7483 9165 9778 9292

Table: Dirt Bikes Sales by Model from 2000 to 2004(Amounts


are in thousands of dollars).

From the table above we can illustrate a line-chart of Dirt Bikes sales history from 2000 to 2004.
The model wise line-chart is shown below.
4500
4078

4000 3759
3647
3290
3500
2832
3000 2615 2627
2454
2500 Enduro 250
1932 Enduro 550
2000 1755 2312
2291 Moto 300
2195
1500 Moto 450
1663
1000
1201
500 773 823
598 661
463
0
2000 2001 2002 2003 2004

Figure: Line-chart on sales of Dirt Bikes (Model Wise)


The performance of a product can be evaluated by the sales amount and growth depending on
the objective type of an organization. If the organization is concerning about short-term
objectives then they may think about the quantity. And if the organization is concerning about
the long term objectives then they may think about the growth.

1.1.1. Best and worst-performing model according to quantity sale:

If we consider sales amount as a measure of good performance Dirt Bikes then Enduro 550
model is the best performing model. In this case worst performing model of Dirt Bikes is Moto
450.

1.1.2. Best and worst-performing model according the growth of sale:

But is we consider growth as a measure of good performance then Enduro 550 is the worst
performing products, because it fluctuated highly from the year 2000 to 2004. The line chart is
showing that Endure 550 sales growth was positive during 2000 to 2003. But after 2003 the
chart shows dramatic fall of sale in Endure 550.

On the other hand, we can say that the performance of Moto 450 was better from 2000 to 2004.
The sales grew moderately but steadily from 2000 to 2004. If Moto Bikes Company thinks about
the long term objective of success then Moto 450 and Moto 300 is good performing bike model
because they have less fluctuation in sales.

For Dart Bikes it is important to consider the long term target let than short term target.

1.2. Domestic vs. International Sales


The proportion of Domestic to International Sales can be calculated by finding the proportion of
Domestic and International sales.

Proportion of Domestic to International Sales =

By considering the equation in the spread sheet we find the following information about
Domestic to International Sales. The finding is shown below.

2000 2001 2002 2003 2004


Domestic 5723 6843 8254 8889 8530
International 528 640 911 889 762
TOTAL 6251 7483 9165 9778 9292
% International 8.4% 8.6% 9.9% 9.1% 8.2%
Domestic to International sales 10.83902 10.69219 9.060373 9.998875 11.19423

Table: Domestic vs. International Sales (Amounts are in thousands of dollars)


From the table we can see that

In the year 2000, the proportion of Domestic to International sales was 10.84:1

In the year 2001, the proportion of Domestic to International sales was 10.69:1

In the year 2002, the proportion of Domestic to International sales was 9.06:1

In the year 2003, the proportion of Domestic to International sales was 9.10:1

In the year 2004, the proportion of Domestic to International sales was 11.19:1

1.3. Growth of International Sales


The growth of international sales can be observed from % International given in the
spreadsheet. Percentage of International Sales can be represented in a line chart and thus can
explain the growth.

12.0%
9.9%
10.0% 9.1%
8.4% 8.6%
8.2%
8.0%

6.0%

4.0%

2.0%

0.0%
2000 2001 2002 2003 2004

Figure: Line-chart on Percentage of International Sales

As we can see from the line-chart above the percentage of international sales are around 8%-
10%. In the year 2000 the percentage of international sales was 8.4%. In 2002 international
sales increased upto 9.9%. But after that the international sales reduced in an equal rate and in
2004 it shows 8.2% of international sales. From the chart above it is clear that the International
sales is not growing but decreasing relative to domestic sales from 2002.
2. Are sales (revenues) growing steadily, and, if so, at what rate? What is the cost of
goods sold compared to revenues? Is it increasing or decreasing? Are the firm’s
gross and net margins increasing or decreasing? Are the firms operating expenses
increasing or decreasing? Is the firm heavily in debt? Does it have assets to pay for
expenses and to finance the development of new products and information system?

Ans.

2.1. Sales Analysis


From the Income Statement we can find the trends of the revenues each year. The table is
showing the revenue from 2002 to 2004.

2002 2003 2004


Revenue/
Net sales 61,529 64,063 60,144

Table: Net Sales from Income Statement

From the table above we can find the line-chart below.

65,000
64,000 64,063

63,000
62,000
61,529
61,000
60,000 60,144

59,000
58,000
2002 2003 2004

Figure: Net Sales / Revenues according to Income Statement

The figure is showing that the sales grew from higher from 2002 to 2003. But from 2003 to 2004
the sales revenue decreased.
2.2. Cost of Goods Sold compared to Revenues
We can easily observe the Revenues and Cost of Goods Sold from the table below.

2002 2003 2004


Revenue/
Net sales 61,529 64,063 60,144
Cost of goods sold 41,072 43,155 45,835
Gross profit/(loss) 20,457 20,908 14,309

Table: Cost of Goods Sold from Income Statement

From the table we can find the line chart below.

70,000 64,063
61,529 60,144
60,000

50,000

40,000 45,835
43,155 Net sales
41,072
30,000
Cost of goods sold
20,000

10,000

0
2002 2003 2004

Figure: Cost of Goods Sold Compared to Net Sales

From the line-chart above we can see that cost of goods sold increases comparatively as the
revenues increased. But from 2003 to 2004 Cost of goods sold increase on the other hand
revenues decreases.
2.3. Gross Margin and Net Margin
The gross margin and net margin have been calculated and presented in the complete Income
Statement.

Consolidated Statements of Income (in thousands)

2002 2003 2004


Revenue
Net sales 61,529 64,063 60,144
Cost of goods sold 41,072 43,155 45,835
Gross profit/(loss) 20,457 20,908 14,309
Gross Margin 33.2% 32.6% 23.8%

Operating expenses
Sales and marketing 3,944 4,537 4,733
Engineering and product development 2,339 2,992 3,141
General and administrative 1,392 1,601 1,913
Total operating expenses 7,675 9,130 9,787
Operating income/loss 12,782 11,778 4,522

Other income/expense
Interest income/expense 80 175 1,747
Other income/(expense) (3,080) (2,914) (6,254)
Income before provision for income 9,782 9,039 15
taxes
Income taxes 535 1,729 1,459
Net income/(loss) 9,247 7,310 (1,444)
15% 11% -2%

2.3.1. Gross Margin

The trends of Gross Margin are being shown in a line chart below.

40.0%
30.0%
33.2% 32.6%
20.0%
23.8%
10.0%

0.0%
2002 2003 2004

Figure: Line Chart of Gross Margin from 2002 to 2004

The line chart is showing that the gross margin is decreasing as the years pass by.
2.3.2. Net Margin

The trends of net margin are shown in a line-chart below.

20%
15%
10% 15%
11%
5%
0%
-5% 2002 2003 2004
-2%

Figure: Line Chart of Net Margin from 2002 to 2004

If we analyze the net margin then we can observe that net margin is decreasing and the net
margin is negative in the year 2004.

2.4. Operating Expense


From the line chart below from the Income Statement we can observe that total operating
expenses is increasing as years pass by.

12,000
10,000
8,000 9,787
9,130
6,000 7,675
4,000
2,000
0
2002 2003 2004

Figure: Operating Expense from 2002 to 2004


2.5. Assets, Debt and Dirt Bikes’s Development
The Balance sheet for the Dirt Bikes is given below. From the table of Balance Sheet, we can
find the effectiveness of current assets and current liabilities.

At December 31 2002 2003 2004


Current assets
Cash and cash equivalents 6,891 7,197 6,994
Accounts reveivable 12,872 12,981 13,083
Inventories 5,843 5,931 6,315
Total current assets 25,606 26,109 26,392

Property plant, and equipment 32,002 34,515 36,920


Other assets 1,834 1,903 1,765
Total assets 59,442 62,527 65,077

Current liabilities
Accounts payable 7,592 8,694 8,943
Accrued expenses and other liabilities 8,654 9,382 10,877
Total current liabilities 16,246 18,076 19,820

Long-term debt 8,890 9,338 9,772


Total liabilities 25,136 27,414 29,592

Shareholders' equity 34306 35113 35485


Total liabilities + shareholders' equity 59,442 62,527 65,077

In 2004 we can see that the current assets greater than the current liabilities. As current
liabilities are not greater than current assets the company is not highly in debt. It means the
possibilities of having enough funds for the organization is high.

So, the Dirt Bikes may have adequate fund for financing on the new technologies and on the
Information System.
The End