Riordan Production, Inc. (Riordan) is a publically held firm established in 1992, devoted to the developing of plastic-type injection molding with establishments in California, Michigan, Georgia, and Cina. In 2150, the company widened the production operations to China. Monetary reports (Appendix A and B) pertaining to the financial years 2005 and 2005 depict the financial position of the company. Proportions calculated via Riordan’s financial statements provide an assessment of financial condition and satisfaction. The following ratios using Riordan’s financial statements will be computed and mentioned: 1) liquidity ratios; 2) activity percentages; 3) influence ratios; 4) profitability ratios; and 5) average P/E.
FLUIDITY RATIOS: INITIAL SOLVENCY
Desk 1: Current Ratio
Current ratio can be described as Solvency Percentage and according to Einfacher (2007) “expresses the working capital relationship of current resources to cover current liabilities. Leichter (2007), declares that “a ratio of two to 1 is regarded as a sign great financial condition. The following stand provides a a comparison of Riordan’s current ratio to get 2004 and 2005: june 2006 Ratio2004 Rate
Current assets $14, 5iphon scam. 0922. 087$14, 643, 4562. 429
Current liabilities$6, 974, 094$6, 029, 696
In 2005, Riordan’s current ratio was 2 .
429 and in 2006 the current proportion improved to 2 . 087. The increase through this ratio provides information to creditors and investors that Riordan is able to pay current liabilities and financially steady.
ACTIVITY RATIOS: ASSET FLUIDITY, ASSET MANAGING EFFICIENCY
Stand 2: Accounts Receivable Turnover Ratio
The accounts receivable (A/R) turnover percentage according to The Totally free Dictionary (2008) reflects “the number of instances in every accounting period that a firmconverts credit sales into money. A high yield indicates effective granting of credit and collection from customers. The following stand provides a comparison of Riordan’s A/R ratio intended for 2004 and 2005: 2006 2004
Net sales$50, 823, 6858. 35 times$46, 044, 2888. 14 times
Average A/R$6, 062, 838$5, 657, 216
The A/R turnover proportion equals Net Sales divided by Normal Accounts Receivable. Riordan is reporting Product sales without the trademark credit and cash and so the Accounts Receivable Turnover Ratio could be more compact.
LEVERAGE PERCENTAGES: DEBT FINANCING AND COVERAGE
Table 3: Debt Proportion
The debt rate according to Investopedia (2008) “indicates what proportion of debt a company has in accordance with assets. The measure offers an idea to the leverage with the company combined with potential hazards the company confronts in terms of it is debt-load. Debt Percentage = Total Liabilities divided by Total Assets. Riordan’s debt rate increased by 2004 to 2005 by. 001 which indicates a slight embrace debt relative to assets. 2005 2004
Total liabilities$12, 476, 927. 36$12, 160, 256. 359
Total assets$34, 592, 182 $33, 856, 256
EARNINGS RATIOS: GENERAL EFFICIENCY AND SATISFACTION
Table four: Gross Profit Margin
Investopdedia (2008) states Gross Profit Perimeter is the amount of us dollars “left over from profits after accounting for the price of goods offered. Low Profit Perimeter is computed by subtracting Cost of Merchandise Sold from Sales and dividing by simply Sales or Gross Margin divided simply by Sales. The table beneath shows the gross income margin pertaining to Riordan pertaining to 2004 and 2005: june 2006 2004
Gross profit$50, 823, 68517%$46, 044, 28819%
Net sales$8, 786, 061$8, 564, 238
Riordan’s low profit perimeter was 17% in june 2006 and 19% in 2004 which is a fall in revenue. Riordan produced 17 mere cents per money in june 2006 compared to 19 cents per dollar in 2004.
COMMON P/E PERTAINING TO THE DEVELOPING INDUSTRY
Stand 5: Price/Earnings (P/E) Proportions
PRICE TO EARNINGS ratios in accordance to Investopedia (2008) happen to be “a value ratio of the company’s current share selling price compared to it is per-share earnings. P/E Ratio = Market Value per Share divided by Income per Reveal. The stand below shows the materials manufacturing industry average PRICE TO EARNINGS: Yahoo Financing Industry Averages Price/Earnings
IndustryP/E
Rubber and Materials Manufacturers8. 6 (Yahoo, 2008)
Conclusion
The Rubberized and Plastics Manufactures’ PRICE TO EARNINGS is almost eight. 6 implying a desirable sector for shareholders. From 2004 to 2006 Riordan provides experienced a marginal decrease in Possessions but can pay liabilities according to the Current Ratio, however the Gross Earnings margin decreased. The Charge Ratio a little bit decreased, however the Account Receivables turnover improved meaning the organization is properly collecting in accounts. The corporation is successful in maintaining asset worth, collecting accounts, and having to pay liabilities, although should raise the profit from revenue by reducing expenses and developing efficient processes.
Referrals
Accounts Receivable Turnover Ratio. (2008). In The Free Dictionary by Farlex online. Retrieved October twelve, 2008 by http://financial-dictionary.thefreedictionary.com Debt Ratio. (2008). In Investopedia Dictionary on the web. Retrieved August 10, 08 from http://www.investopedia.com/dictionary Gross Revenue Margin. (2008). In Investopedia Dictionary online. Retrieved August 10, 2008 from
http://www.investopedia.com/dictionary Leichter, J. (2007, March). Benchmarking Your Business with Financial Percentage Analysis. Contracting Business, 64(3), 82-84. Recovered October being unfaithful, 2008, from Career and Technical Education database. P/E Ratio. (2008). In Investopedia Dictionary online. Retrieved August 10, 08 from http://www.investopedia.com/dictionary Yahoo Fund. (2008) Sector Center ” Rubber & Plastics. Gathered October 12, 2008, via http://biz.yahoo.com/ic/322.html
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