Ratio Analysis Memo ACC/291 – Principles of Accounting II
Running head: MEMO LETTER TO CEO
Riordan Manufacturing Memo
From: Accounting Department
As you may be aware of, the Riordan Manufacturing company that has a significant amount of daily economic activity. The importance of staying one step ahead of what is needed to meet the customers’ needs is essential to our business to continue moving forward toward a successful future. In this memo, a thorough breakdown and overview of past financial years for review. Each ratio and financial accounting data is broken down by types of ratios along with their data accordingly. We will discuss liquidity ratios,…show more content… This is a company that has good financial strength and should be able to meet any unexpected short term debt. During this current period of economic uncertainty, the ability to meet unexpected downturns is an advantage that many other companies do not possess.
Examining the data for profitability shows a company is in a position to continue to do well in the future. Being a manufacturer of goods for other manufacturers is a good position to be in during economic lulls. By offering product to multiple manufacturers, we are not locked in to one product in one market that could be a potential liability due to market fluctuations. Comparing out debt to our assets shows that we are a financially flexible company that lenders will look favorably upon should we need to borrow money in the future. In conclusion, it would appear that Riordan Manufacturing is a dependable company with good financial strength and flexibility. This is a company that appears attractive to both lenders and investors, current or future.
Total Current Assets
Total Current Liabilities
To find the current ratio you need to look on the company’s balance sheet. You take the current total assets and divide by the total current liabilities. This gives you your current