Riordan Manufacturing Finance and Accounting System
University of Phoenix
Ms. Deborah Webb
Week 6 Team Assignment
17 November 2008
Investment in the rubber and plastics industry requires serious analysis of a number of key corporate behaviors. To evaluate Riordan’s Finance and Accounting Systems, knowledge of their industry and line of business is necessary. Economic influences affecting their operations and business strategy must be considered as well. An examination of Riordan’s accounting system and modules is provided followed by calculations of their liquidity, profitability and activity ratios. The pecuniary data, along with historical information, is evidence to their financial status and health of the company. This analysis provides data to compare with other leaders in the same industry so an intelligent and informed investment decision can be reached. Riordan Manufacturing Overview and Business Environment
Riordan Manufacturing, Inc., located at One Riordan Plaza, San Jose, California is the global leader in the manufacturing of plastic injection molds and plastic designs. Riordan products include plastic bottles, fans, heart valves, medical stents and customer plastic parts (Apollo Group, Inc., 2008). A Fortune 1000 company dedicated to quality and extreme precision, Riordan has become a recognizable company in its industry. Riordan Manufacturing is wholly owned by Riordan Industries and provides its unique services worldwide in areas that include California, Georgia, Michigan and China. Riordan employs 550 people with revenues in excess of $1 billion and projected annual earnings of $46 million. In 1992, Dr. Riordan gained venture capital to purchase a fan manufacturing plant in Pontiac Michigan where Riordan Manufacturing was originally incorporated. Today the Michigan plant is the main manufacturer of custom plastic parts. By 1993 the company became a producer of plastic beverage containers manufactured out of Albany, GA. Most recently the company has extended its venture to China as the primary manufacturer of its fans. Riordan’s success and growth looks good on a resume, but their financial ratios tell the absolute truth about their financial solvency, liquidity and profitability. Riordan’s balance sheet and income statement are the artifacts considered, along with other corporate information in evaluation of Riordan’s financial health (Apollo Group, Inc., 2008). Riordan Manufacturing’s Industry and Line of Business
Riordan creates a variety of items including plastic bottles and beverage containers produced in its Albany, Georgia plant. The company also produces all sizes of fans and plastic fan parts, heart valves, medical stents and custom plastic parts with its world-wide plants. The company's research and development is done at the corporate headquarters in California. Major customers include automotive parts manufacturers, aircraft manufacturers, the Department of Defense, beverage makers, bottlers, and appliance manufacturers. Economic Influences Affecting Riordan’s Operations and Strategy
Economic influences affecting Riordan’s operations and strategy include (a) Gross Domestic Product (GDP), (b) growth rate, (c) interest rates, (d) monetary policies, (e) inflation rate, (f) unemployment rate, (g) consumer confidence, (h) currency exchange rates and (i) trade balance. GDP, which is the total product output of a region, the United States in this case, experienced a growth rate of 4.40% in 2004. Estimates for 2005 and 2006 are 3.80% and 3.70% respectively. The economy will continue to demonstrate growth, but more slowly.
The Federal Reserve is expected to raise the Federal Funds and short-term interest rates through the balance of the year and provide them the flexibility needed to act if the economy weakens unexpectedly. This should restrain inflation with the continued economic growth and expected higher oil prices. High...