Riordan Manufacturing Case Study
In the finding of the liquidity, profitability and the solvency ratios regarding the Riordan Manufacturing Inc, it has revealed that the company is able to pay its debts to the creditors and investors. The liquidity ratio is good for our investors, creditors and bankers so that they can see that we can pay off our debts. With the profitability ratio, it comes in handy for the company when trying to find out if we have made any profit for the year or it we have lost money. With using the profitability ratio that accounting team has found a profit margin of 4.29% in 2010, and it went up in 2011 to 4.97%, which is great for the company’s profits. Then we have the solvency ratios that benefit long term creditors and shareholders and give them information
about our assets and how much of it they are paying for. With the solvency ratio we are able to find out how much of the assets are being paid for by creditors, and investors. Debt to Total Assets indicates the company’s degree of leverage and it will also provide some indication of the company’s ability to withstand losses without impairing the interests of creditors. In 2011, 29% of the corporation’s total assets are financed by the creditors and in 2010, 14% of the corporation’s total assets are financed by the creditors. There has been an increase of 15% from 2010 to 2011. If the corporation continues to increase the debt to asset ratio as it has, the greater the risk the corporation may be unable to meet its maturing obligations. We have attached some files so that you are able to see how the accounting team has calculated these numbers. If you have any feather questions about this information just let us know and we will be more then happy to go over it in more detail.
about our assets and how much of it they are paying for. With the solvency ratio we are able to find out how much of the assets are being paid for by creditors, and investors. Debt to Total Assets indicates the company’s degree of leverage and it will also provide some indication of the company’s ability to withstand losses without impairing the interests of creditors. In 2011, 29% of the corporation’s total assets are financed by the creditors and in 2010, 14% of the corporation’s total assets are financed by the creditors. There has been an increase of 15% from 2010 to 2011. If the corporation continues to increase the debt to asset ratio as it has, the greater the risk the corporation may be unable to meet its maturing obligations. We have attached some files so that you are able to see how the accounting team has calculated these numbers. If you have any feather questions about this information just let us know and we will be more then happy to go over it in more detail.