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Overview of chosen organization




Question;Question;Access the information contained in your;selected organization?s balance sheet and income statement to calculate the;following;Liquidity ratios;Current ratio;Acid-test, or quick, ratio;Receivables turnover;Inventory turnover;Profitability ratios;Asset turnover;Profit margin;Return on assets;Return on common stockholders?;equity;Solvency ratios;Debt to total assets;Times interest earned;Show your calculations for each ratio.;Create a horizontal and vertical analysis;for the balance sheet and the income statement.;Write a 350- to 700-word memo to the CEO;of your selected organization in which you discuss your findings from your;ratio calculations and your horizontal and vertical analysis. In your memo;address the following questions;What do the liquidity;profitability, and solvency ratios reveal about the financial position of;the company?;Which users may be interested;in each type of ratio?;What does the collected data;reveal about the performance and position of the company?;Formatyour memo consistent with APA;guidelines.;Overview of;chosen organization;Riordan Manufacturing has three;operating entities?Georgia, Michigan and California?plus a joint venture in the;People's Republic of China. Basically, the operating entities each have their;own Finance & Accounting Systems and they provide input that is;consolidated at Corporate?San Jose. The basic components of each system are as;follows;General Ledger;Accounts Payable;Accounts Receivable;Order Entry;Procurement;Sales and Purchasing History;Invoicing and Shipping;Payroll;Financial Reporting;EDI*;Bar Code Reading*;EDSS (Executive Decision;Support System)*;*San Jose Only;Background;During the due diligence process in;which Riordan acquired the operating entities in Michigan and Georgia the;matter of F & A System's compatibility was not addressed.;Current;Situation Regarding F & A Systems;San Jose has a license for a;fully integrated Windows based ERP manufacturing, distribution and;financial management software application specifically designed for;plastics processors and process and assembly manufacturers. The license;does not include application source code.;Michigan had purchased a vendor;developed software application and the attendant source code for their Fd;A and process application. The vendor is no longer in business. The;application runs on a pair of DEC Alpha's, using the VMS operating system;VAX4000 work stations and programmed in C.;Georgia had purchased a vendor;(different from Michigan) developed software application and the attendant;source code for their F & A and manufacturing process applications.;The systems run on a pair of AS400's, using UNIX operating system, use;PC's (Windows) as workstations, and is programmed in RPG400.;Challenge;The F & A Department has been;unable to achieve anything remotely resembling "seamless;compatibility". Some F & A data is provided to corporate via data;files, some data is provided via hardcopy reports and must be re-entered, some;data is provided via data files but must be converted (redirected) to the;proper account codes and the list goes on. Subsequently, Riordan has the;following situation regarding F & A system outputs at the consolidated;level;Consolidated close of the;General Ledger and subsequently the Income Statement and Balance Sheet is;labor intensive and normally not completed until 15-20 days after month;end.;Audit (to include external;auditors) is required each month and is costly and labor intensive.;Compliance with new government;required reporting requirements at the consolidated level is difficult at;best.;Riordan Enterprises finds the;situation unacceptable and has mandated a solutions(s)/alternatives be;recommended soonest.;NOTE: This situation is transparent;to customers and suppliers as each operating entity has maintained invoicing;payments, etc., as was prior to acquisition.;Riordan;Manufacturing, Inc.;Consolidated Balance Sheet;Fiscal Year Ending;September 30th;2011;2010;Assets;Current Assets;Cash;$3,725,406;$2,807,029;Accounts;Receivable;3,192,094;2,695,342;Current;Portion of Notes Receivable;84,255;102,976;Inventories;9,709,611;8,517,203;Prepaid;Expenses and Other Items;666,591;402,240;Total Current Assets;$17,377,957;$14,524,790;Notes Receivable, less current;portion;$842,551;$936,168;Investment in Joint Venture;1,734,004;1,609,004;Property, Plant and Equipment -;net;26,366,949;16,658,218;Intangible Assets - net;904,473;904,473;Other Assets;183,203;192,845;Total Assets;$47,409,137;$34,825,498;Liabilities and Stockholders;Equity;Current Liabilities;Current;Portion of Long-Term Debt;$1,560,959;$474,032;Accounts;Payable;1,141,561;1,391,385;Accrued;Liabilities;430,477;524,685;Income Taxes;Payable;552,155;359,955;Total Current Liabilities;$3,685,152;$2,750,057;Bank Line of Credit;$114,759;$295,865;Long-Term Debt - less current;portion;9,500,741;1,006,955;Deferred Income Taxes - net;660,503;825,629;Total Liabilities;$13,961,155;$4,878,506;Common Stock;Stated par value is $.01.;20,000,000 shares authorized.;Issued and Outstanding 15,801,332 net of treasury shares.;$29,055,488;$29,055,488;Retained Earnings / (Accumulated;Deficit);4,392,494;891,504;Total Stockholders' Equity;$33,447,982;$29,946,992;Total Liabilities and;Stockholders' Equity;$47,409,137;$34,825,498;Riordan;Manufacturing, Inc.;Income Statement;For the 12 months ending September 30th;2011;2010;Sales;$66,608,660;$56,534,254;Direct Cost of Goods Sold;51,592,470;43,970,250;Gross Margin;$15,016,190;$12,564,004;Operating Expenses;Sales, Marketing & Other;$1,328,615;$1,265,348;Depreciation;1,378,616;1,152,125;Quality Assurance;1,151,176;1,112,247;Research & Development;1,039,637;962,627;General & Administrative;4,954,751;4,674,293;Machining & Systems;143,808;125,050;Total Operating Expenses;$9,996,603;$9,291,690;Profit Before Interest & Taxes;$5,019,587;$3,272,314;Non-Operating Expenses;Interest Expense;$604,616;$121,533;Taxes;1,104,309;719,909;Total Non-Operating Expenses;$1,708,925;$841,442;Net Profit After Taxes;$3,310,662;$2,430,872


Paper#39156 | Written in 18-Jul-2015

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