Bsa310 Week 3 Individual

1

Riordan Manufacturing Profit and Loss Statement

By John Cypher

BSA/310

Mohammad Kamali

In this paper I will be discussing the Riordan Manufacturing’s profit and loss statements, known as an income statement. I will be telling you about the two main points in this paper. I will be discussing the different parts of the company’s income statement as well as each line of the Income statement which has five parts. The last part I will be discussing Riordan Manufacturing’s value as a whole and what it means for shareholders.

Income Statement

The first thing I will be discussing within the income statement is the gross margin. The first line under the gross margin is the Sales line. The Sales is the total amount of products sold within that year. Riordan manufactures different types of plastic products such as bottles, fans, and many others. In 2010, Riordan manufacturing sales margin was about 56.5 million dollars. On the next line under the gross margin is the Direct Cost of Goods Sold (DCGS). DCGS is the manufacturing cost which includes raw plastic and the salaries for the employees. In 2010, Riordan’s total direct cost of goods sold was 43.9 million dollars. Riordan’s total gross margin is 15 million dollars in 2010. That is just the gross margin which is before taxes, operation expenses, and executive pay.

The company’s operational expenses are the second portion of the income statement. One of the typical responsibilities that management must contend with is determining how low operating expenses can be reduced without significantly affecting the firm's ability to compete with its competitors. Operational expenses that Riordan are cost like offices, Sales department, and payroll and any other department that would benefit. The first line of the operational expenses is the sales marketing and other. This “sales” is the cost to sell the products. Some expenses would be...