Riordan’s current financial state will be explained the by following accounting ratios. The current ratio is 1. 17 which means the company is not in a very good financial state for lenders most lenders will look for a 2. 00 or higher. The acid-test ratio is 5. 07 which means the company is not in a very good financial state and they would not be able to pay off their short term debt. A acid-test ratio between . 50 and 1. 00 is a good ratio.
Another test to see how the company’s finances are is the Earning per Share ratio. The earnings per share in 2005 are . 12 cents per outstanding common stock which means the company is not making enough money to cover the outstanding common stock. The markets for plastic bottles, fans, custom plastic parts are affected by Changing economic conditions. With the impact the economy has on the major customers of Riordan Manufacturing; they have to analyzed in order to determine the future direction of company.
With the Automotive parts manufacturers, aircraft manufacturers and appliance manufacturers are all impacted by the economy. With the Beverage makers the economy does not have as large of an impact as the demand for the product has. The current situation regarding the financial and accounting systems at Riordan Manufacturing is they have several different types of accounting systems. In San Jose they have a licensed fully integrated Windows based ERP manufacturing, distribution and financial management software application.
In Michigan they have a vendor developed software application which the vendor is out if business now. The application runs on a pair of DEC Alpha’s using VMS Operating System, VAX4000 work Stations and programmed in C. In Georgia they purchased a vendor developed software application which runs on a pair of AS400 using UNIX operating systems, use PC’s (windows) as workstations, and is programmed in RPG400. With the different types of accounting software there is a problem with getting everything to work ogether. The data is not universal across the company and if the company used just one type of accounting software they would be able to share the information across the company. The company also needs a central location for all their accounting information so that it is easily accessed.
University of Phoenix. (2004). Riordan Manufacturing Virtual Company. Retrieved from https://ecampus. phoenix. edu/secure/aapd/cist/vop/Business/Riordan/Finance/RioFandA001. htm