Financial System: Riordan Manufacturing

3181 words - 13 pages

An analysis of Riordan manufacturing financial systemRiordan Manufacturing is a manufacturing company using state of the art technology to create innovative plastic designs which has earned the company international recognition. The company is know for it extreme precision and quality, and has generated different location in the US, China, and San Jose.Riordan Manufacturing is a Fortune 1000 company owned by Riordan with annual revenue in excess of 1 billion dollars. The research conducted for the company is located at the corporate head quarters, which is San Jose. Riordan's major customers are automotive parts manufactures, aircraft manufacturers, the Department of Defense, beverage mak ...view middle of the document...

Riordan tried to make up this loss by decreasing their non-operational expenses, Interest on expense decreased by about $90,000 and taxes were also decreased by about $100,000. Even though there was a decrease in the non-operational expenses, Riordan still fell short in keeping their profit the same over the two years 2004 and 2005. In 2004 the Net Profit after taxes was $1,990,495 but in 2005 the net profit fell by $34,124 making it 1,956,371.Although Riordan increased sales for 2005 the operating expenses (in all categories) were also increased and this led to the Net profit to decrease. Riordan will have to look at their expenses, see how to cut some of the costs and this will eventually lead to the profit to be increased.Balance SheetAnother Riordan Manufacturing financial report is the balance sheet. A balance sheet, according to Investopedia (2004), is a statement showing the current financial position of the company. This report shows the company's assets, liabilities, and stockholder equality. The balance sheet is divided into two sections, the assets as the first section, and shareholder equity as the second section. Assets are what the company needs to operate the business, and the liabilities and equities support the assets.In examining Riordan balance sheet, the total assets equal the total liability and shareholder equity, indicating that their have a balance report. As seen in the report, the company's total assets were up $735,926 in 2005 from the previous year, while the current assets remains even. In the same year the company managed to maintain an even inventory on-hand and increased it receivables by $400,000. Despite these high points in the assets, the cash on hand dropped by $50,000.On the other half of the balance sheet, the financial obligations Riordan owes to others increased by almost $1 millions; the majority attributed to income taxes. This is evident by the numbers shown in the total current liabilities.The company's long term debt for the year 2005 also increased slightly, up by a little over $200,000, contributing to the overall increase in total liabilities. Further-more, the balance sheet shows that Riordan stockholder's equity increase by slightly over $400,000, an indication of management commitment to invest in the company for future growth.Define the problem with Riordan Accounting SystemRiordan Manufacturing has three operating entities which are Georgia, Michigan and California. This includes Riordan's joint venture with the Republic of China as well. These operating entities have their own Finance and Accounting Systems that provides input that is consolidated at its corporate headquarters in San Jose. There are 12 basic components of the Finance and accounting systems they are: General ledger, Accounts payable, Account receivable, Order entry, Procurement, Sales and Purchasing history, Invoicing and Shipping, Payroll, EDI, Bar code reading EDSS (Executive Decision Support Systems), sales and marketi...

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