Robert Bean, Kashia Doyle, Kenneth Leung,
Paul Mills, Jennifer Sampson, and Colby Williams
Business Systems I
February 14, 2011
An Information Systems Analysis of Riordan Manufacturing
Riordan Manufacturing is a global plastics manufacturer that has 550 employees with has revenues over $1 billion and projected annual earnings of over $46 million (Riordan, 2005). Riordan Manufacturing is wholly own and operated by Riordan Industries. The company is an industry leader in field of plastic injection molding. By leveraging their state-of-art design capabilities, and resources, Riordan Manufacturing has created some very innovative plastic designs that have earned international acclaims. At the same time, the company has been labeled as attention to detail, extreme precision, and enthusiastic quality control. Riordan has manufacturing plants in Albany, Georgia, Pontiac, Michigan, a joint venture in Hanzhou, China, and corporate headquarters and research and development facilities in San Jose, California. Riordan Manufacturing is an industry leader, in not only research and development, but also its earnings history. The financial statements presented by Riordan Manufacturing paints a picture that is most attractive to the seasoned investor. With actual 2005 sales increased 10.38% over that of 2004 and an EBIT of greater than 21, Riordan Manufacturing is will certainly make any investors extremely happy with the return on their investments.
The financial data presented by Riordan Manufacturing sheds light on a company well inoculated against all possible scenarios that the economy may manifest. Although there is a slight decrease in working capital in 2005, over 2004, the company’s forecast is good. With the increase in sales (10.38% in 2005, over 2004) and the decrease in non-operating expense (-15.57% in 2005, over 2004) the survivability of the company is absolutely not up for questioning.
Riordan Manufacturing has proven itself to be a strong company who possesses all the needed resources to meet its obligations in the long-run. Although there was a slight decrease of 6.26% in the in 2005 when compared to 2004, this is a direct result of the doubling of investments in joint ventures. With an EBIT cushion 1.56 in 2005, Riordan Manufacturing demonstrates that it possesses the capabilities to nurture it growth and development in the long-run.
With a current ratio of approximately 2.087 to 1, Riordan Manufacturing possesses the means to ensure substantial liquidity. The quick ratio of 0.96:1 also supports this. The sure foundation that Riordan Manufacturing has built for itself will prove to be an even stronger foundation when the uncertainties of the future are manifested.
The asset management practices of Riordan Manufacturing are sound. With approximately the same level of inventories 2005, the company managed to increase sales by 10.38%. This is very good. Of the 10 asset categories listed in the Asset portion of Riordan Manufacturing’s balance sheet, there were five increase and five decreases in 2005, when compared to 2004. The most notable increase was in investments and joint ventures, which reported an increase of 112.35%, whereas Current portion of Notes Receivables showed the greatest decline.
The debt management practices of Riordan Manufacturing have proven to be very acceptable. This is demonstrated in the debt ratio that stands at 15.90%, and the TIE comfortably at 1:21.25. These number shows that Riordan Manufacturing is capable of weather the typical storm that may arise in the industry.
From the data presented in the Income Statement and Balance Sheet, Riordan Manufacturing has demonstrated itself to be a...