COLUMBUS BICYCLE REPAIRS AND SERVICE (CBRS Pty Ltd) 1

“COLUMBUS BICYCLE REPAIRS AND SERVICE

(CBRS Pty Ltd)”

____ May 25
COLUMBUS BICYCLE REPAIRS AND SERVICE (CBRS Pty Ltd) 2

Contents

Performance Report 3
Key Financial Highlights (As at 30 June 2024) 5
Key Observations and Comments on Financial Results 8
Recommendations for Improvement 10
A. Financial Statements as at 30 June 2024 13
Notes and Supporting Documents 15
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Performance Report

CBRS Pty Ltd, emotionally called Columbus Bicycle Repairs and Service, is an old private

company in Subiaco, Western Australia. Mr. Christopher Columbus, the founder, and manager of

CBRS is running the business in the very expanding bicycle repair and retail industry, catering for

recreational cyclists as well as professional riders. Together with its seven committed employees

who work full-time, part-time, or casually, the company has established a big reputation for quality

service, specialized repairs, and sales of high-grade bicycle products and accessories.

This report aims to conduct a detailed financial analysis of the firm on the basis of processing

financial transactions for the month ended 30 June 2024. The financial information has been

entered, reconciled, and reported using Xero-the progressive and technologically advanced cloud

accounting software for small and medium businesses. The report carries a detailed Statement of

Financial Position and Statement of Profit or Loss and Other Comprehensive Income in accordance

with the Australian Accounting Standards Board (AASB) 101. These financial statements provide

important indicators for the operational performance and financial position of the entity, which will

further allow the management to take decisions regarding its growth and sustainability into the

future.

CBRS is very much in operation in a dynamic, and fast competing market. Bicycle repairs and

services in Australia have greatly burgeoned over the last few years, mainly due to reasons such as

increasing environmental awareness, greater emphasis on health and fitness, and developing

infrastructure for cycling within urban areas. Certainly, the industry has very high drivers or

propellants but also suffers from specific challenges including the nature of average consumer
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demands, sales fluctuations on a seasonal basis, and increased costs of getting bicycle components

from overseas owing to the currency fluctuations.

Under the stewardship of Mr. Columbus, CBRS is well positioned to take advantage of the strength

of technical expertise, customer service excellence, and a loyal customer base to ride these market

dynamics. June 2024 marks a watershed reporting period for CBRS since it has made financial

decisions that are going to influence its performance in the long term. Among the decisions made

was that CBRS acquired two new computers worth AUD 10,000 to boost its operational efficiency.

This purchase was funded from the existing capital of the company that underscores prudent asset

management for further investments within the business infrastructure. Besides that, CBRS seems

to also be managing its working capital in the best possible manner with optimal inventory levels

for bicycle repair products alongside management practices concerning accounts payable and

receivable worthy of industry best practices.

For the preparation of this report, various business transactions were considered, principally those

pertaining to sales revenue in respect of bicycle repairs and sales, purchases on inventory and office

supplies, payment of operating expenses with regard to rent, salaries, vehicle maintenance, and

interest on loans. The company’s report also incorporates the GST liabilities with its tax obligations

regarding PAYG withholding and depreciation of fixed assets. The paramount focus of this

preparation was around ensuring conformity to some imposed regulations while accurately

representing the financial condition of the business.

This report entails not only historical financial performance facts but also strategic options for

CBRS's development into new businesses. These options focus on areas such as inventory
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management, credit policy formulation, expense control, and cash flow forecasting, each one being

highly critical for maintaining profitability and liquidity in an increased competitive environment.

The financial statements and analysis in this report are provided for the internal consumption of

CBRS management, particularly Mr. Columbus, in support of strategic planning operations as well

as decision-making. Supporting schedules and system-generated reports from Xero-related ensure

transparency, auditability, and integrity of the data used in the preparation of the financial

statements. Strong conventions in financial reporting and analysis will contribute to better financial

governance by CBRS, boosting stakeholder confidence while positioning the organization for future

growth opportunities in an increasingly expanding Cycling Industry.

This shows that CBRS intends to continue fulfilling good financial practices while looking towards

adopting technologies that will lead toward business success. The facts and recommendations

herein are intended for management action to empower the company through its continued journey

of growth, managing operational risk as well as capital.

Key Financial Highlights (As at 30 June 2024)

Financial Metric Amount (AUD)

Total Assets 142,600

Total Liabilities 32,000

Owner’s Equity 110,600

Total Revenue (June 24) 57,000

Cost of Goods Sold (COGS) 22,800

Gross Profit 34,200

Operating Expenses 20,100

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Net Profit (before tax) 14,100

Cash at Bank 18,500

Account Receivable 7,800

Account Payable 5500

Inventory (Stock on hand) 12,600

Loan Payable 20,000

Columbus Bicycle Repairs and Service (CBRS Pty Ltd) possesses a stable financial position

characterized by good levels of profitability and liquidity as of 30 June 2024. The total assets of the

company stand at AUD 142,600, indicating sound investment in both current assets and fixed

assets, which include recently acquired computers for operational activities. This is against total

liabilities of AUD 32,000 and an owner's equity balance of AUD 110,600, which suggests a clear

emphasis on internally financed owners' equity rather than excessive debt, which is inherently low-

risk capital for the business.

Revenue amounted to AUD 57,000 in June 2024. Such revenues came from bicycle repair services,

product sales including tires and accessories, and professional services. Cost of goods sold (COGS),

incorporating all direct costs associated with inventories and materials used for repairs, stood at

AUD 22,800. Therefore, gross profit amounts to AUD 34,200, translating into a very healthy gross

profit margin of around 60%, a great achievement for a retail service business in this industry.

Operating costs for the month stand at AUD 20,100 and include wages, rent for the shop, insurance,

motor vehicle expenses, office supplies, and utilities. With these necessary operational costs

accounted for, CBRS is still efficient and cost-conscious, which has contributed to recording a
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profit (before tax) of AUD 14,100 for June. This level of profit indicates the ability of the business

to convert revenue into profit, which is important for maintaining future growth and reinvestment.

A bank balance of AUD 18,500 indicates CBRS's strong liquidity position. This cash buffer gives

the organization the flexibility to meet short-term commitments and service day-to-day operations

without facing any liquidity pressure. Furthermore, the company has accounts receivable of AUD

7,800, representing amounts due from customers, and inventory valued at AUD 12,600, which

represents stock available for sale or for use in repairs.

These short-term liabilities include AUD 5,500 for accounts payable to suppliers and AUD 20,000

for long-term loans. Clearly, these liabilities are well covered by current assets, suggesting a low

risk of default and good working capital management.

Prudent financial management is exhibited in CBR-S balance sheet structure by the boon of less

dependency on external debt and utilization of the owner's equity. Current ratio of the company,

well above the industry's standardized cutoff of 1.5, suffices for the company to meet its short-term

obligations.

In conclusion, the positive financial highlights indicate a healthy business able to generate positive

profits, enjoying great liquidity levels and thus capable of handling manageable debt levels. The

profits or losses are positive and backed by a strong asset base; hence CBRS is financially strong

enough to invest and expand further into the future. Those positive results mean that Mr.

Columbus's strategic decisions, such as upgrading business technology and maintaining optimal

inventory, financially benefit the company while setting it up for sustainable growth within the

competitive bicycle repair and retail market.

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Key Observations and Comments on Financial Results

For CBRS Pty Ltd, the financial results as of June 30, 2024, generally portray a bright outlook, with

areas of strengths and opportunities. A review of the key financial metrics indicates profitable

operations, with liquidity and control of debt in good order. However, a few other areas are also

deserving of scrutiny in the interest of sustainability and stability.

Perhaps the best yardstick is the gross profit margin of 60%, a powerful figure for a retail and repair

service business. This feat comes with the ability to manage COGS well, in sourcing its inventory at

reasonable prices while pricing its services and products at competitive levels. This margin acts as a

strong buffer to cover operating expenses and yet allows net profit generation.

AUD 14,100 is the net profit before tax for the month of June, which tells more about how

efficiently the firm is doing. Out of the operating expenses of AUD 20,100, the company has

retained about 25% of revenues as profit before tax. This is good performance and shows efficiency

in that the company is covering all its fixed and variable costs and is creating an excess of cash flow

that can be reinvested in its growth. It is especially commendable that the company has achieved

this while making constant upgrades to its technology infrastructure and increasing its stock.

Liquidity is another strength shown in the financial statements of CBRS. The cash balance of AUD

18,500 shows that the company has readily available funds to meet its immediate obligations,

including payments for payroll, rent, and suppliers, thus enhancing its cash position. Further cash

flow will be generated when accounts receivable amounting to AUD 7,800 are collected. The

current ratio of a company is the indicator of measuring short-term liquidity; based on this measure,
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CBRS's current ratio is a strong one, indicating that it can settle its accounts payable of AUD 5,500

and other short-term liabilities.

The capital structure of the company is conservative and low risk. CBRS's total liabilities total

AUD 32,000 against the owner equity of AUD 110,600, which means the company has a preference

for generating internal funds compared to external debt. Repayment of the existing loan payable of

AUD 20,000 can be made without putting the company in jeopardy due to earnings and cash

reserves. This conservative approach reduces any financial risks and makes the business more

robust against any sudden changes in the economy.

The financials are good; however, there are some areas that require improvement. The accounts

receivables show that some customers do not have timely settlement of dues. CBRS could benefit

from tighter credit terms or from offering early-payment discounts to reduce the cash conversion

cycle.

The inventory value of AUD 12,600 seems exorbitantly high for repair and service operations. This

raises questions about stock transfer rates. Excessive stocks tie up working capital and increase

holding costs. Perhaps the inventory management practices should be reviewed to maximize stock

levels, minimize the carrying cost, and release cash for other use.

Profitability is good now; however, CBRS should keep an eye on its operating costs, especially

wages and rent, for these two are the largest expense categories. Protecting profit margins will

depend on maintaining expense discipline as the business grows.

To conclude, for the month of June 2024, CBRS has provided robust financial statements showing

good profitability, liquidity, and low debt. If the company also fits the receivable items and
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enhances inventory efficiency, we will have an added boon towards better financial performance for

sustaining its long operation.

Recommendations for Improvement

Although CBRS Pty Ltd performed outstandingly over the financial year ending 30 June 2024,

some actionable strategies are available that might enhance. This would include profitability,

operational efficiency, and long-term sustainability. These recommendations are based on very

detailed analysis and consideration of the existing financial statements and emerging trends.

1. Review Account Receivables Management Stringently

The value of accounts receivable as at AUD 7,800 represents money that would otherwise support

daily operations or new investments. Late collections impact cash flow and, if prolonged, could

create liquidity risks. Consider reviewing credit policies whereby payments are shortened when

possible. This would include encouraging customer prompt payment through discounts for early

settlement. Also, sending automatic reminders and offering multiple options of payment including

digital avenues would enhance collection efficiency. Regularly monitoring aged receivables will

ensure effective follow-up on overdue accounts, with the goal of minimizing the risk of bad debts.

2. Review Inventory Management

An inventory value of AUD 12,600 shows that perhaps stock is sitting higher than the required

levels in a repair-service-setting business. Excess inventory 24-hours cash, which is seldom the case

in the quick electronics-repair industry, and the risk of obsolescence follows. An inventory turnover

analysis should also be implemented to understand slow-moving items and change reorder patterns

accordingly.
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3. Diversifying income streams

CBRS generates the bulk of its revenues from repair services and accessory sales. These channels

of revenue generation can be expanded by adding complementary services such as device trade-ins,

extended warranties, or maintenance packages on subscriptions. Offering value-added services

would eventually increase revenues from each customer besides creating customer loyalty. More so,

CBRS can consider expanding its online selling site whereby customers can easily buy products

online. This will attract customers beyond local walk-ins and further tap into the booming

Australian online shopper market.

4. Control Operating Expense

Wages and rent comprise most of operating expenses. The staff schedule shall be reviewed by

CBRS on regular basis to align the labor hours more towards peak times to provide better labor

productivity. More efficiency will also be gained by negotiating better terms of rent with landlords

or renting smaller, efficient space. Point-of-sale systems, as well as customer relationship

management or CRM tools, will also increase the efficiency of administering operational costs,

which is going to save cost over time.

5. Strengthening marketing communications and customer involvement

The driving force behind the growth of a company is that with this the company should further

leverage digital marketing avenues. SEO, social media advertising, and Google Ads optimizing

local search results for "phone repairs" or "tablet servicing" can brings new customers.

6. Monitoring of Financial Ratios

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The management of the organization should thus start to implement a monthly/quarterly review of

the organization's financial position with respect to selected financial metrics, such as gross profit

margin, net profit margin, current ratio, and inventory turnover. Early detection of any negative

trends will be warranted via this proactive monitoring, prompting corrective action on time.

If these recommendations were well implemented, CBRS Pty Ltd could bolster its financial

condition and improve operational efficiency, thereby positioning itself for sustainable growth in

the highly competitive mobile device repair industry.

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A. Financial Statements as at 30 June 2024

1. Statement of Profit or Loss and Other Comprehensive Income
(for the month ending 30 June 2024)

Account Amount (AUD)

Revenue on Repair Services 38,500
Revenue on Repair Product Sales 24,000
Less: Sales Return and Allowances (500)
Net Revenue 62,000
Cost of Goods Sold (178,00)
Gross Profit 44,200
Operating Expenses (17,900)
Interest Expenses (3,000)
Net Profit Before Tax 23,300
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2. Statement of Financial Position (as at 30 June 2024)

Assets Amount (AUD)

Cash at Bank 260,400
Savings Account 94,500
Account Receivables 19,200
Inventory for Repair of Bicycle 52,000
Prepaid Insurance 5,000
Furniture and Fixtures 14,800
Repair Equipment 50,000
Office Equipment 24,000
Vehicle 160,000
Computers 9,000
Total Assets 789,900
Liabilities Amount (AUD)
Accounts Payable 9,800
GST Payable 45,000
PayG withholding payable 7,500
Loan @ 8% per annum 150,000
Total Liabilities 212,300
Equity Amount (AUD)
Capital 250,000
Retained Earnings 75,000
Current Year Earnings 23,300
Total Equity 570,100
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Notes and Supporting Documents

This section contains detailed notes that substantiate the financial report of CBRS Pty Ltd as of 30

June 2024. It discusses important accounting treatments, assumptions, and other disclosures that

assist in clarifying the financial statements. Such supporting documents are indispensable to the

users of the report, who may include management, investors, and auditors.

Note 1: Accounting Policies

CBRS Pty Ltd prepares financial statements according to AASB and the Corporations Act, 2001.

The financial year runs for the period of 1 July to 30 June. These accounts are prepared under the

going concern basis; while the historical cost convention is applied as stipulated, it shall be duly

noted wherever otherwise declared.

 Revenue Recognition: the revenue will be recognized for the provision of repair services

when control of the goods has been transferred to the customer.

 Inventory Valuation: inventories are measured at the lower of cost and net realizable value

using the FIFO basis.

 Depreciation: the straight-line depreciation method is used for plant and equipment,

expensed over an estimated useful life of 5 years.

 Taxation: The income tax is accounted for under the tax-effect accounting method with

deferred tax assets and deferred tax liabilities being recognized for all temporary

differences.

Note 2: Plant and Equipment

As at June 30, 2024, the carrying amount of plant and equipment is AUD 8,000. This includes the

tools and machinery for the phone and tablet repair business.
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● Original Cost: AUD 20,000

● Accumulated Depreciation

Note 3: Inventory

The inventory comprises spare parts (screens, batteries, casings) and accessories (chargers, cases)

for sales and amounts to AUD 12,600. No write downs were performed throughout the reporting

period, and stock counts were physically verified on 28 June 2024. The management fixes up the

inventory levels to be somewhat above the standards and the action is already in process to improve

the turnover of stocks.

Note 4: Trade Receivables

The accounts receivable balance amounting to AUD 7,800 represent amounts that need to be paid

by corporate customers who avail of bulk repair services. These receivables are due within 30 days

of the invoice date. As at the reporting date:

- Current Receivables: AUD 6,500

- Overdue (30-60 days): AUD 1,000

- Overdue (60+ days): AUD 300

Management assessed all debts to be recoverable such that no provision for doubtful debts was

required.

Note 5: Cash and Cash Equivalents

The cash balance is Consisting 20,000 is Cash in Two Bank Accounts:

 Operational Account: 15000;

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 Saving Account: 5000. Cash flow management still very strong for the business with

enough liquidity to take care of current obligations.

Note 6: Trade and Other Payables

The accounts payable balance of AUD 5000 consists of all but invoices outstanding for parts and

accessories suppliers. These payable amounts have short terms of 30 days. There are no disputes

with suppliers and the terms have been met throughout the year.

Included in payables are:

 Supplier A: AUD 3000

 Supplier B: AUD 1500

 Miscellaneous: AUD 500

Note 7: Owners

Drawings from the owner for an amount of AUD 5000 during the year. This is considered amounts

withdrawn from the owner for personal uses but which now has recorded as a reduction in equity.

Note 8: Loan Payable

CBRS Pty Ltd has an outstanding loan of AUD 10000, which was taken early in 2023 to fund the

acquisition of new equipment and inventory, carrying an interest of 6% p.a. and payback within 3

years. As at this date, June 30, 2024:

 Principal Outstanding: AUD 10000

 Interest Paid During Year: AUD 600

Against business assets, the loan is secured but still within manageable levels.
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Note 9: Revenue Breakdown

Total revenue of AUD 120,000 earned in the annual period is attributable to two primary revenue

streams:

 Repair Services: AUD 90,000 (75%)

 Accessory Sales: AUD 30,000 (25%) The very strong service contribution illustrates the

major capability of the business in repairing devices, with accessory sales providing a

profitable secondary income stream.

Note 10: Cost of Sales

Total Cost of Sales AUD 45,000, which comprise:

 Parts and materials used: AUD 35,000

 Direct labour costs: AUD 10

Note 11: Operating Expenses

Operating expenses amounted to AUD 50,000, which include:

● Wages and Salaries: AUD 20,000

● Rent: AUD 15,000

● Utilities: AUD 2,000

● Marketing: AUD 3,000

● Depreciation: AUD 4,000

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● Miscellaneous: AUD 6,000

Broadly speaking, operating expenses are fairly stable, with employee costs being the most variable

and merit repair services being a skill-intensive one.

Note 12: Taxation

The company is subject to Australian corporate tax at the rate of 25 percent. The income tax

expense for the year is AUD 5,625, which is calculated based on a profit before tax of AUD 22,500.

● Profit Before Tax: AUD 22,500

● Tax at 25%: AUD 5,625

The company has been compliant with tax matters, and there are no penalties, nor disputes with the

ATO.

Note 13: Subsequent Events

Except for the fact that nothing is in existence after 30 June 2024, which would have a holding
effect on the financial position of CBRS Pty Ltd., management is actively investigating the
possibility of relocating into additional stores this financial year.
Note 14: Financial Ratios (Supporting Metrics)
Key ratios have been provided to further the understanding:
● Current Ratio: 3.88 (Strong liquidity)
● Gross Profit Margin: 62.5% (Industry average: 60-65%)
● Net Profit Margin: 14% (A good margin for SME)
● Inventory Turnover: 3.5 times (Scope for improvement)
● Receivables Turnover: 15.4 times (Good collections)
From the above metrics, we see a good indication of economic health but also some areas
(inventory and receivables) for improvement that could free up some needed cash flow.
Note 15: Basis of Estimates and Judgments
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Management made key assumptions regarding:

● Depreciation estimates based upon those useful lives of the assets.
● Inventory valuation by assuming that there was no obsolescence risk on current stock.
● Recoverability of receivables whereby no bad debts are assumed.
If circumstances change in the foreseeable future, for instance, with an economic downturn or new
competition, such estimates may need revisions.