Blue Sky Bikes Stockholder

Blue Sky Bikes Stockholder Report
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Table of Contents
Corporate Strategic Thrusts…Pg. 3
Long-Term Perspective to Defer Profits…Pg. 3
Risk-Taker - Willing to Take Chances to get Ahead…Pg. 3
Pioneer Market Leader- First to Market to get Ahead…Pg. 3
High Visibility…Pg. 4
High Personal Touch…Pg. 4
Aggressive Development of Production Capability (Demand Fulfillment) …Pg. 4
Embrace Conscious Capitalism…Pg. 5
Financial Decisions…Pg. 5
Non-financial Decisions…Pg. 5
Company Valuation…Pg. 7
Projected ROI…Pg. 8
Business Analysis…Pg. 9
Liquidity Ratios…Pg. 9
Activity Ratios…Pg. 10
Leverage Ratios…Pg. 10
Profitability Ratios…Pg. 10
Statement of Cash Flows…Pg. 11
Conscious Scorecard…Pg. 14
Appendices…Pg. 16
Stockholder Report
In the course of the past six quarters at Blue Sky Bikes, our seven corporate strategic thrusts have been instrumental in our financial and non-financial decision-making. They entail our Long-Term Perspective to Defer Profits to Build a Strong Competitive Position, Risk-Taker - Willing to Take Chances to get Ahead, Pioneer Market Leader- First to Market to get Ahead, High Visibility, High Personal Touch, Aggressive Development of Production Capability (Demand Fulfillment), and Embrace Conscious Capitalism.
On our Long-Term Perspective to Defer Profits, Blue Sky Bikes realized net losses for the first six quarters of our business operation thus; -264,000 for Quarter 1, -173,306 for Quarter 2, -78,376 for Quarter 3, -341,129 for Quarter 4, -156,376 for Quarter 5, and -128,765 for Quarter 6, so that we may concentrate on building a stronger competitive position (see Appendix B).
Blue Sky Bikes’ willingness to take chances to get ahead saw increased revenues for Quarter 6 (908,415), from the previous period’s 896,175, due to the financial decision to invest money in fixed capacity leading to the availability of fixed capacity for quarters 2 through to 6 and the realization of enhanced performance from the new store locations that we had opened in Quarter 1 and 2 in Bangalore and Rio de Janeiro respectively, in addition to higher revenues from our new brands of CD-Race (205,900), introduced in Quarter 3, and Rec2 (382,800), introduced in Quarter 6 (see Appendix C).
The strategic thrust as a pioneer market leader has seen our major concentration on the market segment of Recreational Biking, enabling Blue Sky Bikes to achieve the highest market share of 4.06% in this segment, with a future plan to be the market leader in this segment. From the onset, Blue Sky Bikes’ focus was on the Recreational Biking market segment, with Mountain Biking and Speed Biking falling in the second and third priority respectively, achieving market shares of 0.93% and 1.9% respectively. Having opened our second and final store in Rio de Janeiro, which had the highest potential for Recreational Biking, we also retained our Bangalore market, which has the second-highest potential market for recreational biking (see Appendix D).
The strategic thrust of high visibility has been fulfilled by sustained advertising that saw our advertising expenses rise to a historical high of 303,970 in Quarter 6 from a low of 76,000 in the two preceding quarters, 4 and 5. The opening of the second store in Rio de Janeiro enhanced Blue Sky Bikes’ visibility.
The higher personal touch has been met by the non-financial decision to mainly specialize in the market segment of Recreational Biking that has seen high demand in this segment. This has ensured that Blue Sky Bikes maintains the specialty experience in dealing with this particular line of clientele.
Blue Sky Bikes has been able to achieve the strategic thrust of fulfilling customer demand by maintaining our operating capacity at 2,990 over the last four quarters. This can also be seen in the amounts expensed in Research and Development, system improvements costs and the investments in the amounts in Quality Costs over the six quarters.
Embracing cautious capitalism as a strategic thrust meant that Blue Sky Bikes considered the Triple Bottom Line approach in our business operations. The people pillar was embraced by the financial decision on enhanced employee compensation as seen in the amount of the sales force expense that increased to 73,224 in Quarter 6. Our employee satisfaction improved in Quarter 6 to a cumulative Human Resource Management indicator of 0.778, slightly below the industry average of 0.804. During the six quarters, Blue Sky Bikes made investments in quality assurance, evidenced by the amounts spent on quality costs, to ensure that the products that we present to our markets are environmental-friendly and in no way intended to harm the environment. We intend to make further investments concerning the improvement of the environment to promote the planet pillar.
In retrospect, we believe that the past six quarters might have seen Blue Sky Bikes make either right or inappropriate financial and non-financial decisions.
The foremost consideration that Blue Sky Bikes would have given is the sustained expansion into the other market segments of Mountain Biking and Speed Biking to improve our market share that currently stands at 0.93% and 1.9% for Mountain and Speed categories respectively. This is from the realization that our four competitors are performing better in terms of market share due to their earlier entry and huge expansion into all three market segments. As of the last quarter, Blue Sky Bikes had a below industry-standard daily fixed capacity of 33 bikes. An improvement in the fixed capacity is projected to increase revenues from higher demand since the current quarter market demand of 719 bikes is bound to be surpassed given sustained marketing and advertising.
In addition, Blue Sky Bikes would have reinvested cash back into the business or through other income-generating investments like debt securities, instead of maintaining high cash balances across the six quarters. This also explains the minimal Investing Activities Cash Flow from our Statement of Cash Flows. For instance, as of the end of Quarter 6, Blue Sky Bikes had cash of amount 2,688,048 as reflected in our Cash Flow Statement and Balance Sheet. An alternative to holding the cash would have been investing the same in expanding our geographical reach to improve our market share and putting more cash into environmental initiatives such as the ones that will cut down on our carbon footprint. Besides, this cash would have been invested in employment benefits. These shortcomings might have resulted in lower revenues and a depressed market share.
One of the decisions that Blue Sky Bikes can hold its head high on is the financial decision to invest in Quality Assurance, and Research and Development. Blue Sky Bikes commenced its investment in Research and Development from the onset and investment in Quality Assurance in Quarter through to Quarter 6. This investment in Research and Development was instigated by a certain industry concern regarding the soundness of the carbon fiber used in the production of our 3D printed bikes. From the research findings, we started investing in enriched carbon fiber. We injected 180,000 into Research and Development in Quarter 1, maintaining a minimum of 30,000 for the past four quarters. To this end, Blue Sky Bikes has an impressive cumulative Investment in the Future indicator of 5.529, which is above the industry average of 4.719.
Consequently, our investment in fixed assets for storage purposes led to a decline in the expenditure on storage expenses between Quarter 3 and Quarter 6, to an average of 30,000 per quarter. By investing 720,000 in fixed assets for storage in Quarter 1, Blue Sky Bikes managed a cumulative net fixed assets for storage purposes of 1,170,000 in Quarter 6, cutting the storage expense from a high of 84,000 in Quarter 1 and 103,000 in Quarter 2 to an average of 30,000 for the four last quarters.
The other resolve that brought a positive impact on the business is the investment in Advertising that rose from a low of 76,000 in Quarters 4 and 5 to a historical high of 303,970 in Quarter 6. This resulted in increased sales as evidenced by the upward movement from 327,680 in Quarter 2 to 908,415 in Quarter 6.
Lastly, the improvement in employee benefits and compensation through the investment in Salesforce expense of 23,587 in Quarter 2, rising to 73,224 in Quarter 6, was a morale booster and ensured an improvement in our employee compensation and satisfaction.
Valuation
The valuation process will help establish the fair economic value of our company. Business valuations are normally conducted for diverse reasons which include but are not limited to the determination of the fair sale price of a business in the case of a sale of a company, a merger, or acquisition. For our case, this valuation will serve a reporting purpose. There are several techniques utilized for the valuation of a business. Blue Sky Bikes will utilize the Market Capitalization method to determine its current worth. This method derives the company value by multiplication of our number of outstanding common shares by the latest stock price. The number of outstanding common shares, extracted from the Balance Sheet, is 50,000, whereas the latest stock market price, extracted from the Stock History, is $250. Therefore, multiplying 50,000 by $250 gives the company value as $12,500,000. Blue Sky Bikes will utilize the Net Asset Valuation (Book Value) method to determine its current worth. This method considers the shareholder equity value as the worth of the company by subtracting total liabilities from the total assets of the company as presented in the balance sheet. As per the balance sheet, our total assets for Quarter 6 is $3,858,048, with nil liabilities. Therefore, our company's worth is $3,858,048. See below the excerpts of the Balance Sheet and Stock History.
Projected ROI
Return on Investment, ROI, is a financial measure that compares the gains or losses from an investment to the cost of such an investment. Expressed as a percentage, this metric is used by potential investors to evaluate the choice of their investment, whether to put their money in a particular investment opportunity or not. One of the methods for arriving at the ROI is by dividing the Net Retur...