Financial forecasting helps managers to foresee events before they take place. A significant concern is that the growth of the company may need supplementary sources of finances because profit may often be insufficient. One should consider anticipated upcoming amounts of receivables, inventory, payables, and other accounts as well as its expected earnings and borrowing necessities when forecasting. Companies use the information as way to invest. By tactically scheduling how successfully to congregate profit goals and make the best use of shareholder wealth companies will continue to grow.
The data presented in Riordan's Economic Forecast indicates positive economic conditions for the company as well as many opportunities . There was an increased spending in research and development expenses of $903,000 for the year with capital expenditures of $250,000 in October 2004, January 2005, and $350,000 in April 2005. Sales, marketing, and other expenses were $1,020,000 indicating Riordan's attempt to leverage relatively low interest rates into new investments to enter new markets and increase productivity.
Economic growth is expected to be steady and the inflation rate may decline, and interest rates will increase moderately with $138,000 interest income annually. Oil prices are expected to fall, and as a result, reduce transportation and shipping costs. General and administrative expenses for the 2005 operating budget is $1,812,000 with Machining and systems expenses at $654,000.
The value of the dollar will decline, marginally improving export opportunities. The labor market should strengthen and this will result in larger payrolls nationally and higher labor costs for Riordan Manufacturing, but also will support consumer spending. Riordan's budget for direct labor was an average of $2,216,224 per month with labor costs remaining level from October of 2004 through March of 2005 then declining slightly for two months and increasing above the average in July of 2005 to $2,830,791 only...