To the Board of Directors of East Coast Choppers This report presents the firms financial statement analysis for the years of 2011-2012. Overview of the firm The East Coast Choppers represents the mountain bike portion of the bicycle industry. Our strategy is a low price , high quantity ideology. Our key competitor in the industry include firm 4 .Financial results for 2012 are as follows : Wholesale sales of $8,163,272 Profit after tax of $1,409,980 Shareholder value of $11.60 Earnings per share $1.41 With sales of $ 8,163,272 , East Coast Choppers exceeded firm 4 by just over $1,000,000. As well , East Coast Choppers had a good advantage over the industry average , as it was $ 7,848,195. With a Gross Margin of $3,856,524 East Coast Choppers overcame Firm 4’s Gross Margin of $3,360,000, however did not make the benchmark for the industry , which was $3,922,965. Analysis of results Vertical Analysis of Income Statement Cost of goods sold decreased from 53.4% to 52.8% , meaning for every dollar the firm generates it cost six cents less than the previous financial year with respect to the increase in sales from the year2011 to 2012. For every dollar of revenue it costs $0.02 less for our firm to generate than Firm 4. With the East Coast Choppers decrease in COGS of 0.06, firm 4 had only decreased from 53.4% to 53.0% giving the East Coast Choppers a comparative advantage. The industry average had decreased from 53.4% to 50.0% in COGS, meaning our firm has not met expectations at this level . With a profit after tax increase from 14.2% in 2011 to 17.3% in 2012 , the company had a 22% change in profit after tax. Whereas Firm 4 only managed a 4% increase in profit after tax from 2011 to 2012. Compared to the industry’s average of 15.9% which shows that our company has made considerable improvement. With the East Coast Choppers improvement in gross margin of from 46.6% to 47.2% , there’s been an increase of 1.0%. In comparison to East Coast Choppers , Firm four only showed an increase to 47% in gross margin with regards to their 2011 percentage of 46.6%. Unfortunately East Coast choppers did not manage to meet the industry average of 50% gross margin . Horizontal Analysis of Income Statement Sales have increased 14.2%. we showed an considerable advantage in sales compared to Firm 4, who showed no change in percentage of sales. As well East Coast Choppers was able to outperform the industries average sales increase which was 9.8% Our COGS increased 12.7% in 2012, whereas Firm 4 had a decrease of 0.8% . With regards to the industry average East Coast Choppers once again did not meet expectations , as the average of COGS was 2.8% Gross margin increased 15.8% , with respect to Firm 4’s 0.9% increase in gross margin, once again our firm is overachieving with regards to our key competitor. Despite or respectable increase in gross margin, our company did not meet the industry average of 17.8%