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ACC 291 week 5 ratio analysis memo on Riordan Manufacturing

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Listed below you will find a quick analysis of the company using productivity, Liquidity
and solvency ratios. This analysis is accompanied by vertical and horizontal analysis.
These analysis gives anyone inquiring a good picture of the company’s overall
performance. This analysis is also a good way to determine the company’s financial
standings for the said years.
According to the analysis in the year 2004, Riordan’s current ratio was 2.429 and in
2005 the current ratio improved to 2.087. The decrease in this ratio gives anyone
inquiring a clear picture of how financially stable the company was in 2004 and 2005.
It is also good information for anyone planning to invest in Riordan.
Riordan manufacturing has developed as a producer of plastics as well as foam-
based products. It is without a doubt that this success has come from the
consistency that the company has been representing over the last two years.
Through the audit and review Riordan Manufacturing has been very consistent from
fiscal year 2004 to fiscal year 2005. The greatest of these consistencies would have
to be accounts receivable that grew by 7.2%. Many outside entities that range from
potential stockholders to creditors for future endeavors will view these numbers.
Riordan Manufacturing did maintain the same amount of current assets between
both of the reviewed years. The current assets are a worthy representation of the
company’s ability to keep and maintain profits. The stockholders will mostly be
interested in this line as it is a respectable judge for the potential for growth of the
company.
Another area that the company had a slight growth in is the total assets for the
company.
Riordan had growth in their total assets by just over 2%. An abundant amount of this
growth was because the company’s investment in tangible assets such as equipment
and manufacturing plants. The growth in the total asset line does a great job of

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improving liquidity of the company. With a higher amount of liquidity the company
can show that if worse comes to worst they can pay the bills. This line will interest
creditors, in addition to the growth in this category so that they can have confidence
that they will receive their capital back.
Riordan manufacturing has proven that they have had consistent growth through the
years, so long as they continue to work on keeping their total liabilities to a minimum
for the stockholders while continuing to grow total assets for the company.
LTD Ratio Analysis Memo
Riordan Manufacturing
Liquidity Ratios:
* Current Ratio
Current Assets ÷ Current Liabilities
2005
$14,555,092
$6,974,094
=2.09
2004
$14,643,456
$6,029,696
= 2.43
* Quick Ratio
(Cash + Accounts Receivable) ÷ Current Liabilities

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Anonymous
Had to paraphrase some of the content but overall, really useful material.

Anonymous
Thanks, good work

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