Riordan Manufacturing Profit and Loss Statement Riordan Manufacturing, Inc. is a worldwide manufacturer of plastic injection molding.

The company produces plastic products such as heart valves, medical stents, custom plastic parts, bottles and fans (Apollo Group, Inc., 2006e). Riordan Manufacturing sales between 2004 and 2005 reported sales of $46 million and $50 million respectively. Its profits in 2004 were $3.2 million, which is a slight difference from the 2005 figure of $3 million (Apollo Group, Inc., 2006c). This paper provides detailed analysis about the overall financial status of Riordan Manufacturing. In addition, the end objective of this report is to view a Profit And Loss statement for Riordan Manufacturing and the companys management accounting information system.

Income Statement Analysis

A comparison of Riordans income statement, shows increases in both sales and expenses from 2004 to 2005, but, experienced a 2% decrease in depreciation, a 6% decrease in gross profit and a 2% decrease in net profit (Apollo Group, Inc., 2006c). Riordans current income sheet is included in Appendix A.

Profitability Ratio Another ratio in order to measure operating efficiency is the Operating Ratio. This ratio is calculated by dividing the operating expense by net sales. In 2004, Riordan had an operating ratio of 0.12, while in 2005 that ratio decreased to 0.11 (Apollo Group, Inc., 2006c), which indicates that the organization is increasing the ability to generate profits even when revenues decrease (Investopedia, 2009a).

Balance Sheet Analysis Riordans current balance sheet can be found in Appendix B. At first glance, Riordan's balance sheet discloses a profitable company with an excellent equity for the stockholders. Over the past three years, Riordans profits have been relatively stagnant despite investment ventures in China. Riordan also exhibits possible concerns with its accounts receivables and inventory levels. Riordan Manufacturing holds a significant amount of inventory on hand, turning it over approximately every 68.2 days or a ratio of 5.32 (Apollo Group, Inc., 2006a). The industry standard for the rubber and plastics industry is 11.86 or approximately every 30 days (Yahoo Finance, 2011).

Riordan Manufacturing balance sheet also reveals an experienced steady increase in liabilities in 2004 and 2005; however, the balance sheet also revealed variations in specific areas suggesting their efforts to reduce liabilities and increase profits (Apollo Group, Inc., 2006a).

Conclusion Each piece of the financial component of Riordan Manufacturing helps construct how the company stands financially. The income statement shows that Riordan needs to increase the Research and Development expense in order to foster future growth and current product improvement, which will help them realize better revenues and improve sales by offering new and improved product lines. The income statement also showed a manageable financial position with an acceptable investment risk. The balance sheet determined that the company is more than capable of paying off its obligations. Connectivity will be guaranteed with the addition of the new accounting software and will ensure data migration between the headquarters, the operations offices and the international branch. These individual sections will serve as puzzle pieces which, when joined, will make up what Riordan Manufacturing is now, a fully operational international industry player.

References Apollo Group, Inc. (2006a). Riordan Manufacturing. Finance & accounting Balance Sheet. Retrieved August 7, 2009. BSA/500 Business Systems I. https://ecampus.phoenix.edu/secure/aapd/cist/vop/Business/Riordan/Finance/RioFandA002.htm Apollo Group, Inc. (2006b). Riordan Manufacturing. Finance & accounting Capital Budget Executive Summary FY 2005. Retrieved August 7, 2009. BSA/500 Business Systems I. https://ecampus.phoenix.edu/secure/aapd/cist/vop/Business/Riordan/Finance/CapBudget2005.pdf Apollo Group, Inc. (2006c). Riordan Manufacturing. Finance & accounting Income Statement. Retrieved August 7, 2009. BSA/500 Business Systems I. https://ecampus.phoenix.edu/secure/aapd/cist/vop/Business/Riordan/Finance/RioFandA003.htm Apollo Group, Inc. (2006d). Riordan Manufacturing. Finance & accounting - Overview. Retrieved August 1, 2009. BSA/500 Business Systems I. https://ecampus.phoenix.edu/secure/aapd/cist/vop/Business/Riordan/RioMfgHome002.htm Investopedia. (2009a). Operating ratio. Retrieved August 7, 2009, from http://www.investopedia.com/terms/o/operatingratio.asp

Investopedia. (2009b). Research and development - R&D. Retrieved August 7, 2009, from http://www.investopedia.com/terms/r/randd.asp Investopedia. (2009c). Return on sales - ROS. Retrieved August 7, 2009, from http://www.investopedia.com/terms/r/ros.asp Yahoo Finance. (2009). Rubber & plastics overview. Retrieved August 1, 2009, from http://biz.yahoo.com/ic/322.html