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Calculate the Following Financial Ratios for Kudler Fine Foods, and Compare Them to the Food Retail Industry

Essay by   •  October 2, 2011  •  Case Study  •  1,865 Words (8 Pages)  •  2,660 Views

Essay Preview: Calculate the Following Financial Ratios for Kudler Fine Foods, and Compare Them to the Food Retail Industry

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Introduction

Financial State

Financial Records

What Should Be Included in the Accounting Systems

What Systems Should Connect to the Accounting System

Conclusion

References

Introduction

Riordan Manufacturing is a manufacturer of plastic products conducting its business across the globe. Founded in 1991 by Dr. Michael Riordan, Riordan Plastics, Inc., as it was known at the time, began with the mission of research and development of high tensile strength plastic substrates. It was not until 1992 that Riordan Manufacturing began to become the company that it is known as today. Dr. Riordan purchased a plant in Pontiac, MI that manufactured fans and changed the company name to Riordan Manufacturing, Inc. Nearly a year later, the company had expanded its production to the business of plastic beverage containers. Today, the company employs nearly 550 employees and averages annual earnings of $46 billion. Riordan's major customers are automotive parts manufacturers, aircraft manufacturers, the Department of Defense, beverage makers and bottlers, and appliance manufacturers.

The Riordan corporate headquarters is located in San Jose, California, with main offices in Albany, Georgia, Pontiac, Michigan, and most recently Hangzhou, China. Key research and development is accomplished at the headquarters office, while the main offices handle the production and distribution of products such as parts for fans, plastic beverage bottles, and even custom parts requested by various customers. The company is led by President and CEO Dr. Riordan, Senior Vice President and head of the Research and Development department Kenneth Collins, and Chief Operating Officer Hugh McCauley. Under them are various other leadership and management positions, such as Chief Information Officer, Chief Financial Officer, and many more.

Financial State

Problems With Riordan's Finance and Accounting

After reading the Finance and Accounting information of Riordan, it is easy to see that they have a vast problem in this area.

Riordan's current problem is its reporting of its finances in a seamless way. At the moment it's company in San Jose has a fully integrated Windows based Enterprise Resource Planning (ERP) manufacturing, distribution and financial management software application specifically designed for plastics processors and process and assembly manufacturers bit the license does not include a source code. Riordan's company in Michigan purchased a vendor developed software application and the attendant source code for their F & A and process application but the vendor is no longer in business; their Georgia based company purchased a vendor developed software application that was different than what Michigan purchased, and the attendant source code for their F & A and manufacturing process applications. The systems run on a pair of AS400s, and use UNIX OS and PCs with Windows as workstations and are programmed in RPG400.

This mismatch of programs is what has led Riordan's problems in reporting financial data appropriately. Some of the data is provided to the corporate office in San Jose via data files that are either hard-copy that must be manually re-entered into a database. Some data is made available via data files that have to be converted to the proper account codes and that is not the end of Riordan's woes, the list goes on and on.

Riordan needs to research and hire a reputable company to build one financial program for its entire company here in the U.S. and in China so that all data regarding sales, purchases, and general ledger information can be accessed with ease when the time comes. This will allow data, when sent electronically, to be retrieved and read without any problems.

Suggested Accounting Modules

Riordan Manufacturing, Inc. can benefit from the following accounting modules:

* System Manager - This module controls the computerized accounting system. The systems manager can define master files, look-up tables, hardware installed, and department and location descriptions. Finally, the system manager can create reports.

* General Ledger - This module is the core of the accounting system. The general ledger receives entries from other modules (i.e. accounts payable, accounts receivable, and payroll) on a daily, weekly, or monthly basis.

* Accounts Receivable - This module handles the reporting of income owed to an organization. Accounts receivable is often responsible for billing clients. This module can also recognize deposits to bank accounts.

* Accounts Payable - This module handles the reporting of money due to others. Accounts payable can print computer-generated checks to vendors. This module can record invoices and allows an organization to recognize expenditures and update budgets at the purchase order stage.

* Inventory - The inventory module updates inventory stocks and prices when goods are received. When items are sold, this module will automatically reduce the inventory. The inventory module can also link to the purchase order system to show goods on order.

* Payroll - The payroll module tracks payroll information about employees, including wages paid, taxes withheld, benefits provided, and loans due. This module may also have the ability to track employee information pertaining to W-2s.

* Fixed Assets - The fixed assets module tracks key information, such as cost, service date, titleholder, and useful life of fixed assets. This module can track a slew of other information pertaining to goods, such as model and serial numbers, warranty information, service information, and vendor information. This module can also process depreciation costs.

Balance Sheet, Income Sheet, and Cash Flow

According to much of the reading, three important financial documents/statements must be thoroughly examined. Those are the Balance Sheet, the Income Statement, and the Cash Flow Statement. For this analysis, we're going to concentrate on the first two. The balance sheet tells investors how much money a company has, how much it owes as well as how much is left over for stockholders. This is where the cash flow statement would come in. It shows where the money is being spent; the income statement is a evidence of how much money the company earns.

Upon examining Riordan's Balance Sheet and Income Statement,

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