Riordan Manufacturing Analysis

Running head: RIORDAN MANUFACTURING ANALYSIS

Riordan Manufacturing Analysis

University of Phoenix Online

BSA 500

Abstract

Riordan Manufacturing is a global plastics manufacturer and a leader in the field of plastic injection molding. This paper will provide a brief background history of the company, some identified core values, ratio analyses, a variance analyses on the companies financials, an analysis of the current accounting systems and recommendations on providing appropriate communicative and data gathering software for the future accounting systems.

Riordan Manufacturing Analysis

The objective of this paper is to provide an analysis of Riordan Manufacturing’s financial situation and its current financial system. Included in this paper is a brief overview of company values, an analysis of company financial statements and ratio’s, accounting modules, and additional modules that should be connected to Riordan’s accounting system.

Company Background & Core Values

Founded by Dr. Riordan in 1991, the company's focus was on research and development and the licensing of its existing patents, but in 1993, the company expanded into the production of plastic beverage containers when it acquired a manufacturing plant in Albany, GA. Their advanced capability allows them to create innovative plastic designs that have earned international acclaim. Currently with 550 employees and facilities in Albany, Georgia, Pontiac, Michigan, Hangzhou, China and San Jose California they have projected annual earnings of $46 millions.

Riordan Manufacturing values being a nationwide leader in implementing diversity in the workplace. Through innovative ideas from many different cultures and traditions Riordan designed a company where recruitment, development and retention of diverse talent are a priority. Employee diversity continues to enhance the development and delivery of innovative products to customers all around the world. Global marketplaces and the communities served by Riordan Manufacturing benefit from this major commitment to embrace and respect a diverse labor force.

Other core values of equal importance are attention to detail, extreme precision, and enthusiastic quality control. Providing customers with “value-added solutions to their most demanding design challenges” (Virtual Organizations Portal, 2005) remains a company standard. With facilities in San Jose, California, Albany, Georgia, Pontiac, Michigan and Hangzhou, China, they have the capacity to fulfill client’s unique needs, provide innovative solutions, products and services at a reasonable cost, and seek, through their commitment to their core values, to develop long-term relationships with customers.

Financial Analysis

Financial ratios are indicators of a company's performance and financial condition. The following analysis shows Riordan Manufacturing’s ratios and how they can be used in making financial decisions. Here, we have compared two separate years of financial data to facilitate forecasting and analyses.

Liquidity Ratios

Liquidity Ratios are used to provide information about a company's ability to meet short-term financial goals or obligations. The current ratio is the ratio of current assets to current liabilities (for example):

Current Ratio = Current Assets/Current Liabilities.

Current Ratio: 2003 = 15,415,168/5,836,032 = 2.64

2004 = 14,643,456/6,029,696 = 2.42

With a current ratio higher than 2, the company is performing in line with market expectations. The current ratio for its industry is 1.8.

One downside of the current ratio is that the “hard to liquidate inventory” may be included in the equation. The Quick Ratio is an alternate method:

Quick Ratio = Current Assets – Inventory/ Current Liabilities.

Quick Ratio: 2003 = 15,415,168 - 8,074,880/5,836,032 = 1.25

2004 = 14,643,456 – 7,854,112 / 6,029,696 = 1.12

A Quick Ratio between 0.5 and 1.0 is usually considered satisfactory. But a ratio under 1.0 may also be a hint of some cash flow problems. Riordan’s Quick Ratio is over 1 which indicates that