Riordan Manufascturing Memo

Riordan Manufacturing Memo

Team C

ACC/291

May 24, 2012

Trang Mai

Riordan Manufacturing Memo

To: CEO

From: Accounting Department

Your company the Riordan Manufacturing is a Fortune 1000 enterprise with profits in addition of one billion dollars. Riordan employs 550 personnel and has probable earnings of 46 billion dollars. In this memo we will discuss the liquidity, profitability, and solvency ratios revealed about Riordan’s financial position. We will discuss the people or investors that are interested in these types of ratios and why they are interested. Finally to be discussed is the company’s position, such as performance on how the company as a whole is functioning.

The liquidity breakdown of the company is set up as such: cash was 305,563, short-term investment’s is + 238,504, Receivables is +6,062,838, current liabilities / 6,974, 094 which equal a ratio of .95 receivables. The receivables turnover ratio is 8.7 times and the inventory turnover is 5.35. Profitable ratios is net sales over average assets which look like 50,823,685/[($34,592,182 + $33,856,256)/2]=1.5%, this means your asset turnover is 1.5%. Net income over net sales equal the company’s profit margin, which looks like so $1,956,371/$50,823,685 =3.8%, so the profit margin for Riordan is 3.8%. Return on assets is net income over average assets= return on assets and is looks like $1,956,371 / [($34,592,182 + $33,856,256) / 2] = 5.7%, so return on assets are 5.7%. Return on common stockholder’s equity is net income over average common stockholder’s equity equal return on common stockholder’s equity which looks as such $1,956,371 / [($22,115,255 + $21,696,000) / 2] = 8.9%, so the return to the stockholders is 8.9%. Also these numbers are explained more in detail on the balance sheet and on the end of year report.

First financial report breakdown is the method of inspecting interactions between financial statement components and manufacturing assessments with applicable data. It is a respected...