Financial Analysis : Riordan Manufacturing

Horizontal analysis allows side by side comparisons on a year to year basis to determine the performance from one year to the next. The company decides on standards to compare the results of the analysis. Standards are researched by checking competitors, internet research of general industry guidelines or standards created from past experience in the company.

Liquidity is important for any firm as it is an assessment of the ability to pay its' liabilities in the short term. There are two main liquidity ratios: the current and the quick ratio. The current ratios divides the current assets by the current liabilities to assess how many times the current assets can pay the current liabilities (Elliott and Elliott, 2011). Traditional ratios are usually in the region of 1.5, but this may vary depending on the industry and nature of the business (Elliott and Elliott, 2011). The current ratio is shown in table 1.

Simply put, the horizontal analysis compares specific line items on a financial statement to a base year and computes a percentage change for the year in question. Our horizontal analysis here uses 2013 as the base year and looks at subsequent change relative to that. On the income statement, we should be cheered Amazon’s strong 43.72% growth in net sales between 2013 and 2015, which

As the financial analyst of the company, this report is written in respect to how the financial position of the company can be improved. This report is aimed for the senior management team.

The company’s debt ratios are 54.5% in 1988, 58.69% in 1989, 62.7% in 1990, and 67.37% in 1991. What this means is that the company is increasing its financial risk by taking on more leverage. The company has been taking an extensive amount of purchasing over the past couple of years, which could be the reason as to why net income has not grown much beyond several thousands of dollars. One could argue that the company is trying to expand its inventory to help accumulate future sales. But another problem is that the company’s

Liquidity ratio. The firm’s liquidity shows a downward trend through time. The current ratio is decreasing because the growth in current liabilities outpaces the growth of current assets. The quick ratio is also declining but not as fast as the current ratio. From 1991 to 1992, it only decreased 0.35 units while the current ratio decreased 0.93 units. Looking at the common size balance sheet, we also see that the percentage of inventory is growing from 33% to 48% indicating Mark X could not convert its inventory to cash.

Liquidity ratios measure the short term ability of a company to pay its obligations and meet their needs for maintaining cash. According to Cagle, Campbell & Jones (2013), “A good assessment of a company’s liquidity is important because a decline in liquidity leads to a greater risk of bankruptcy” (p. 44). Creditors, investors and analysts alike are all interested in a company’s liquidity. After computing liquidity

Accounting helps to measure an organizations activities, process data into reports, and translate the results to decision makers. Financial statements and reports help to present the company to the public in financial terms. The information on these data statements can used to evaluate the company through vertical and horizontal analysis. Vertical analysis is the proportional analysis of a financial statement. Normally, vertical analysis is done with a financial statement over a period of time. When using vertical analysis, a line item on a financial statement is listed as a percentage of another item (Harrison, 2015). A horizontal analysis is the comparison of information or ratios over a series of reporting periods. Horizontal analysis helps investors and analysts to control how a company has grown over time. Analysts and investors could use horizontal analysis to compare a company's growth rates in relation to its competitors and industry.

Before beginning an analysis of a company it is necessary to have a complete set of financial statements, preferably for the pas few years so that historical trends can be obtained. Ratios are a way for anyone to get an idea of the financial performance of a company by using the information contained in the financial statements. Ratios are grouped into four basic categories, liquidity, activity, profitability, and financial leverage. This document will use a variety of these ratios to analyze the firm, Sample Company, as of December 31,2000.

- The financial statements for the past three years show a decline trend in both the operation and return on shareholder of the company, so a closer look at the factors contributing to this decline is needed.

Our choices led to a constant increase in net income over the three years. Short term debt increase by approximately 100% percent but steadily reduced over the next three years. We were happy with the positive growth of the company and the fact that we were able to pay off most of the initial short term funding required by the increase in working capital requirement. Overall the current situation of the company in 2018 is good, although the total value created is less than 20% of that created in phase 1. From this we learned that the value of the firm can be significantly increased more through a reduction in working capital requirement than through increasing the firm’s sales and net income.

Balance sheets and income statements are a snapshot of a company’s stability and financial situation. Combined the statements show the income, expenses, and stockholder’s equity in the company. These statements are often analyzed by financial institutions when a company comes to them needing a loan. Stockholders and other investors also look at these statements to make sure their investment will return a profit for them. This paper will look at four different companies and their balance sheets and income statements. The companies are Eastman Chemical Company, Covenant Transportation

Horizontal analysis is also known as trend analysis. It is a financial statement analysis method that demonstrates changes in the amounts of equivalent financial statement items over a period of time. Moreover, it is a useful tool in order to assess the trend situations in an effective and a more comprehensive manner. It involves the statements for two or more periods to evaluate trend situations. This analysis may be conducted for income statement, balance sheet, schedules of current & fixed assets, and statement of retained earnings of an organization (Wainwright, 2012).

Horizontal analysis is the comparison of a company’s historical financial information over a specific period of time. The analysis helps to determine whether an increase or decrease has taken place in particular areas of the financial performance. A horizontal analysis of Wynn’s income statement and balance sheet provides insight into their performance from 2013 and 2014. During this time period, Wynn’s assets increased 8%. Much of this growth was the result of a 37% increase in their investment securities and a 16% increase in their prepaid expenses. However, the firm did experience a 10% decrease in their cash and cash equivalents. The most drastic change occurred in the firm’s stockholder’s equity, which increased nearly 60%. This drastic increase is likely due to the increase in retained earnings over the same period, which increased from $66 million to $164 million. The horizontal analysis of the firm’s consolidated statements of income reveals mostly insubstantial. Wynn

The purpose of this memorandum is to provide organization’s financial analysis by identifying our position and performance as well as to assess Riordan Manufacturing’s future financial performance. Our team has evaluated the three broad areas of profitability, risk and source and uses of funds. The liquidity ratios are the following: the current ratio is 4.72 which mean that for every dollar in current liabilities, there is a $4.72 dollars in current assets. Compared with the