Riordan's Manufacturing Financial Ratios

Gross profit is defined as the difference between Sales and Cost of Sales. The gross margin (or gross profit ratio) expresses the gross profit as a proportion of net sales. The gross profit margin ratio measures how efficiently a company uses its resources, materials, and labour in the production process by showing the percentage of net sales remaining after subtracting the cost of making and selling a product or service. It indicates the profitability of a business before overhead costs. The higher the percentage, the more the business retains of each dollar of sales. So: the higher the gross profit margin ratio, the better.

Investment in the rubber and plastics industry requires serious analysis of a number of key corporate behaviors. To evaluate Riordan’s Finance and Accounting Systems, knowledge of their industry and line of business is necessary. Economic influences affecting their operations and business strategy must be considered as well. An examination of Riordan’s accounting system and modules is provided followed by calculations of their liquidity, profitability and activity ratios. The pecuniary data, along with historical information, is evidence to their

The net profit margin ratio is an important ratio used to determine a company’s financial health as it gives a more accurate view of how profitable a

It is noted in table no.1 that the gross profit margin has been increasing during the past four periods of time, starting from 30% in 2012 to 35% in 2015 this is related with the increment of sales, the higher the better and it means that the company has been doing a good strategy with prices. This indicates a financial success and means that the product is viable for the company.

Riordan is an Industry leader in Manufacturing Injection Molded plastics. Some of their products include Medical Stents, Heart Valves, Plastic bottles and Fans. Riordan is based in the United States, with an expansion manufacturing plant in China. The Chinese plant produces fans. Team A will review the manufacturing process of the fans in China, and discuss a more efficient plan for a new Inventory management system, Mass customization, Lean Production and methods for Strategic planning.

This ratio outlines a company’s profits as they relate to their sales. This ratio will reflect changes in gross margin but also account for other expenses the company incurs. This ratio tends to be more consistent across multiple periods. Should there a significant swing between periods, it may trigger the need for additional reviews and

When it comes to the debt ratio, it is important to note that it remains one of the ratios lenders take a special interest in. Indeed, according to Brigham and Ehrhardt (2010), "creditors prefer low debt ratios because the lower the ratio, the greater the cushion against creditors' losses in the event of liquidation." Ideally, a company's debt ratio should be less than 1 as this would be an indicator that the company has a lower proportion of debt relative to its assets. In the above scenario,

2013 was a bad year for GameStop with a negative operating cost and net profit. Over a five year period, their gross profit margin has increased. Which indicate how well GameStop is performing at generating profits or revenues relative to a certain metric. The

The gross profit margin looks at cost of goods sold as a percentage of sales.

Gross Profit Margins is a financial ratio which for evaluating a company's core activities of profits. The gross profit Margins has remained relatively static over the three year period, but a little decline in 2007 Gross profit margins is 20.3 but in 2009 became 17.2 it means the 2009 cost will be higher than 2007 cost, the devaluation of the pound is the major reasons, because the sales was risen in this years, the cost also risen.

Gross Profit Ratio – It illustrates the relationship between the gross profit of an organization and the net sales. It is a tool to assess the operational efficiency of an organization. It is calculated as;

Net Profit Margin has reduced from 5.05% in 1993 to 4.53% in 1994 (a net decrease of 0.52% ). The main culprit in the decrease of profit margin seems to be the rising interest expense shown by the interest expense to revenue ratio rising from 0.44% to 1.34%.

The Gross profit margin ratio is a measure of profitability concerned with the effectiveness of generating profit. It represent the relation between the gross profit and the sales revenue generate in the same period (McLaney and Atrill, 2012). The higher of this ratio is better for the company. The Dixons´ gross profit margin is virtually the same in both years, 2013 is 7,32% and 2014 is 7,47%. However, it is too low to compare with the industry average ratio (15%). It should be as a consequence of the high cost of sales. Reducing the cost of the goods sold is an immediately measure that the company must implemented. Additionally, increasing the price of the product should be another alternative. These changes will reflect positively in the profit of the year leading to a higher gross profit margin.

Gross profit margin measures the percentage of gross profit that is generated from the sales of the company. This shows the proportion of money remaining from the sales after accounting for the cost of sales. (Value Click Inc, 2012)

A company's total sales revenue minus its cost of goods sold, divided by the total sales revenue, expressed as a percentage. The gross margin represents the percentage of total sales revenue that the company retains after incurring the direct costs associated with producing the goods and services sold by a company. The higher the percentage, the more the company retains on each dollar of sales to service its other costs and obligations.