Resource: Riordan Manufacturing
Click the Virtual Organization link on the student website to access the Virtual Organizations.
Select one of the Virtual Organizations as the basis for the assignment.
Obtain faculty approval of your selected organization before beginning the assignment.
Access the information contained in your selected organization’s balance sheet and income statement to calculate the following:
· Liquidity ratios
o Current ratio
o Acid-test, or quick, ratio
o Receivables turnover
o Inventory turnover
· Profitability ratios
o Asset turnover
o Profit margin
o Return on assets
o Return on common stockholders’ equity
· Solvency ratios
o Debt to total assets
o 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:
Riordan Manufacturing, Inc. Income Statement For the 12 months ending September 30th
2011
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
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
· What do the liquidity, profitability, and solvency ratios reveal about the company’s financial position?
· Which users may be interested in each type of ratio?
· What does the collected data reveal about the company’s performance and position
Answer includes Ratio calculation, horizontal analysis and veryical analysis in Excel. No memo is there.
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