Competition Bikes Financial Analysis

Competition Bikes, Inc.

Competition Bikes, Inc. makes bicycles for professional and other highly accomplished riders

who compete in bike races, biathlons, and triathlons.

Sixty percent of all race winners have been victorious using a Competition Bikes, Inc.

bicycle when at least ten percent of the entrants were also using a Competition Bikes, Inc.

bicycle. This extraordinary success rate consistently is a topic of conversation among racers

and this word of mouth advertising has been effective in promoting sales. The company also

uses these statistics to promote sales, although its advertising efforts have been quite

limited.

The Main Competitor

Two Wheel Racing, Inc. is the only other manufacturer that offers a competitive product in

this market space. Their product weighs only a few ounces more than the bikes made by

Competition Bikes, Inc. but Two Wheel Racing builds a chain driven product.

Two Wheel Racing, Inc is also a publicly traded company. Their financial ratios are provided

for comparison and analysis.

THE COMPANY AND ITS CENTRAL OPERATIONS

Ownership History:

Larry Ferguson formed the company in 2001 in his garage. An avid racer, Larry often heard

comments from other riders about how heavy and unreliable their bikes were. Larry

identified and sought to remedy this market niche by creating a specialized product that

would satisfy the needs of racers. His new company also proved to be a vehicle for financial

success.

Early success prompted Larry to take the company public after three years in order to

acquire sufficient capital to build the two current manufacturing facilities. His bikes enjoyed

high demand and good profit margins. Larry continues to be the CEO of the Competition

Bikes, Inc. and retains a 40% interest of company shares.

Standard Company Procedures for Operations

Each of the manufacturing locations for Competition Bikes, Inc. uses operating procedures

based on department and function, as applicable. The