Riordan Manufacturing, Inc. is a company that produces rather high-tech plastic products. Some of the products that Riordan produces are Plastic Bottles, fans, heart valves, medical stents, and custom plastic parts. This memo is analyzes financial viability of Riordan Manufacturing, Inc. The first part of the memo will show the calculations for various types of ratio analysis. In addition, there are horizontal and vertical analyses for Riordan's balance sheet and income statement. Lastly, there are definitions and discussions that will show what the liquidity, profitability, and solvency ratios indicate about the financial position of the company; identify which users would be interested in each type of ratio; and what the collected data indicates about the performance and position of the company.
Liquidity ratiosCurrent ratioCurrent ratio = Current Assets/Current Liabilities= $14,555,092/$6,974,094 = 2.09Acid-test (quick) ratioAcid-test (quick) ratio = Cash + Short-term investments + Receivables (Net)/Current Liabilities= $305,563 + $283,504 + $6,062,838/$6,974,094 = 0.95Receivables
US-assets-and-liabilities
Riordan Mansion, Flagstaff
Riordan Mansion, FlagstaffturnoverReceivables turnover = Net credit sales/Average Net Receivables= $50,823,685/ ($6,062,838 + $5,657,216/ 2) = 8.7 timesInventory turnoverInventory turnover = Cost of Goods Sold/Average Inventory= $42,037,624/$7,850,970 = 5.35Profitability ratios for 2005Asset turnoverAsset Turnover = Net Sales / Average Assets= $50,823,685 / [($34,592,182 + $33,856,256) / 2] = 1.5%Profit marginProfit Margin on Sales = Net Income / Net Sales = $1,956,371 / $50,823,685 = 3.8%Return on assetsReturn on assets = Net Income / Average Assets= $1,956,371 / [($34,592,182 + $33,856,256) / 2] = 5.7%Return on common stockholders' equityReturn on Common Stockholder's Equity= Net Income / Average Common Stockholder's Equity= $1,956,371 / [($22,115,255 + $21,696,000) / 2] = 8.9%Solvency ratiosDebt to total assets= Debt to total Assets = Total Debt / Total Assets= $12,476,927 / $34,592,182 = 36%Times interest earnedTimes Interest Earned = Income before Income Taxes and Interest Expense / Interest Expense= $3,042,820 / $143,175 = 21.25 TimesHorizontal...