Summary of Riordan's financial status
Figures in Riordan's financial statements and the computations of its financial ratios suggest that the company is in a precarious financial state. While Riordan has some working capital and an acceptable current ratio, its quick ratio (which is a better indicator of a company's health) falls below acceptable standards. At 56%, its debt to equity ratio is excessive by industry standards and implies that the company heavily relies on debt to facilitate operations. While it generated a positive net profit in 2005, its profit margin and return on assets are lower than that of other businesses within its industry--this suggests that Riordan may have problems regarding profitability.
Riordan does not have enough cash to pay off its current liabilities and long-term debt. This may mean that Riordan is having problems converting assets to cash, and may be danger of bankruptcy--comparing its cash to its debts shows that Riordan appears to be relying on long-term debt to survive.
Riordan also has a very high inventory, which means that they are having difficulties selling products for profit. A huge chunk of its assets are also tied up to receivables--suggesting that the company may be having problems collecting payment.
On a positive note, its