Riordan Manufacturing Ratio Analysis
MEMORANDUM TO: CEO, Riordan Manufacturing Inc. FROM: Financial Analyst DATE: Tuesday, July 30, 2013 SUBJECT: Ratio analysis of Riordan Manufacturing Riordan manufacturing has developed as a producer of plastics as well as foam-based products. Listed below is a quick analysis of the company using liquidity, profitability, and solvency ratios. The analysis is accompanied by vertical and horizontal analysis of the balance sheet and the income statement. This examination gives anyone inquisitive a good picture of the company’s performance. The research reveals the company’s financial positions and also a good way to determinate the company’s financial
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According, to the analysis in 2010, Riordan’s current ratio was 5.28 and in 2011. The current ratio was not as high as the previous year, it was only 4.72. The Acid-test ratio, which measures immediate short-term liquidity, for 2010 was 2.00 and for 2011 the current ratio is 1.88. This information gives a clear picture of how financially stable the company was in 2010 and 2011, it is also good information for anyone planning to invest in Riordan.Receivables turnover for 2011 was 5.10 times and for 2010 it was 4.71 times, meaning the company has a strong credit collection policy and do well collecting cash quickly from accounts. Inventory turnover, which is how quickly goods enter and leave storage, for 2011 was 5.66 times and 5.62 times for 2010 meaning the company manages its resources well. Accordingly, through the financial analysis of Riordan’s Balance Sheet, their Inventory Turnover rate shows slight growth by .04% and Receivables Turnover with …show more content…
The analysis for 2011, the company had 1.62 times and for 2010 it had 1.66 times. This means the company is making good use of assets to generate revenue. For profit margin, the company’s profitability increased slightly from 4.30% to 4.97%. Return on assets, which measures the efficiency of a business in using its assets to generate net income increased from 7.16% to 8.05%. Return on common stockholders’ equity increased by 3.02% from 2010 to 2011 that indicates the company has enough money to pay common shares, dividends, and retain funds for business growth.Profitability Ratio is very important information for Investors, customers, managers, andgovernmental
According, to the analysis in 2010, Riordan’s current ratio was 5.28 and in 2011. The current ratio was not as high as the previous year, it was only 4.72. The Acid-test ratio, which measures immediate short-term liquidity, for 2010 was 2.00 and for 2011 the current ratio is 1.88. This information gives a clear picture of how financially stable the company was in 2010 and 2011, it is also good information for anyone planning to invest in Riordan.Receivables turnover for 2011 was 5.10 times and for 2010 it was 4.71 times, meaning the company has a strong credit collection policy and do well collecting cash quickly from accounts. Inventory turnover, which is how quickly goods enter and leave storage, for 2011 was 5.66 times and 5.62 times for 2010 meaning the company manages its resources well. Accordingly, through the financial analysis of Riordan’s Balance Sheet, their Inventory Turnover rate shows slight growth by .04% and Receivables Turnover with …show more content…
The analysis for 2011, the company had 1.62 times and for 2010 it had 1.66 times. This means the company is making good use of assets to generate revenue. For profit margin, the company’s profitability increased slightly from 4.30% to 4.97%. Return on assets, which measures the efficiency of a business in using its assets to generate net income increased from 7.16% to 8.05%. Return on common stockholders’ equity increased by 3.02% from 2010 to 2011 that indicates the company has enough money to pay common shares, dividends, and retain funds for business growth.Profitability Ratio is very important information for Investors, customers, managers, andgovernmental