Memorandum for Riordan Manufacturing
And Kudler Fine Foods
By: Gerald Dingus
Riordan Manufacturing Financial Ratios
Riordan Manufacturing can be seen as doing quite well in their industry. According to the most recent measurements supplied by the company Riordan Manufacturing has increased profitability in a one year period by about $1 million dollars. These are according to the figures supplied publicly on their internal website.
According to the public figures made available Riordan Manufacturing produced total assets in the end of the fiscal year of 2004 of $33,856,256. When this is compared to their most recent report in the end of 2005 in which they ended the year with total assets of $34,592,182, it is seen that they increased total assets by $735,926.
In 2005 Riordan Manufacturing ended the year with a debt ratio of .36. This calculated by find the companies total liabilities (12,476,927) and dividing them by the reported total assets (34,592,182). Based on the numbers supplied profit margin for the company can also be calculated by dividing the net profit by the net sales. In this case the net profit is report as being 1,956,371 after taxes and the net sales is reported as being 3,042,820, so by using our calculation the profit margin of Riordan Manufacturing comes out to 64%. This high profit margin indicates that Riordan Manufacturing has a high margin of safety within the industry.
Riordan Manufacturing also reports on their current ratio. The way that we are able to determine the current ratio of this company is by taking the current assets and dividing them by the current liabilities reported. In this case the current assets are equal to 14,555,092 and the current liabilities are 6,974,094 so by using our formula we are able to determine that the current ratio of Riordan Manufacturing is 2.08. This is good for the company because it means for every dollar that the company is in debt they have $2.08 in excess...