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Chapter 2 Runing Case Assignment: Analyzing Financial Performance
Software skills: Spreadsheet charts and formulas
Business skills: Financial statement analysis
As part of your analysis of the company for management, you have been asked to analyze
data on Dirt Bikes’s financial performance. Review Dirt Bikes’s selected financial data in
the Introduction to Dirt Bikes, which can be found at the Laudon Web site. There you
will find Dirt Bikes’s income statement and summary balance sheet data from 2010 to
Use the instructions at the Laudon Web site and your spreadsheet software to
calculate the gross and net margins in Dirt Bikes’s income statements from 2010 to 2012.
You can also create graphs showing trends in selected pieces of Dirt Bikes’s income
statement and balance sheet data if you wish. (You may want to rearrange the historical
ordering of the data if you decide to do this.)
Prepare an addition to your management report that answers these questions:
• 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?
• 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 firm’s 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
systems?
