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Business Systems Analysis

Essay by   •  February 8, 2011  •  Essay  •  984 Words (4 Pages)  •  2,098 Views

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Business systems provide an integral part of the mechanism that keeps businesses functioning from day to day as well as provide a means of obtaining success and future growth. Through the utilization of systems as well as the continual exploration of ways to either improve existing systems or deploy new systems, businesses are able to obtain and maintain in-house, market and consumer confidence. Through the analysis of those systems in relation to Riordan Manufacturing, Inc., that include both information systems and processes, we will provide analysis of existing systems and future recommendations for consideration.

The Riordan Manufacturing, Inc. analysis is comprised of five primary areas identified. Each area is responsible for maintaining specific systems that assist the business with its ability to perform its daily activities effectively. Those areas include:

* Finance and Accounting

* Sales and Marketing

* Human Resources

* Operations

* Information Technology

The analysis for each area outlined provides a summary of existing systems, the pros and cons of those systems currently available, as well as the relationship of those systems identified to systems maintained by other areas. Lastly, system recommendations are provided that will further benefit Riordan Manufacturing with obtaining greater consumer confidence and stronger investor relations as well as improve processes and existing systems in order for Riordan Manufacturing to achieve future success.

Finance and Accounting

Financial and accounting systems entail those systems that provide assist with the management of company assets as well as track a corporations' activities. Riordan Manufacturing employs 550 people and projects annual earnings of 46 million dollars. It has three operating units in Georgia, Michigan, and California; including a joint venture in the People's Republic of China. Our objective is to accomplish and continue profitability assuring excellent financial and accounting systems for effective management and growth. The companies finance and accounting systems are responsible for the following:

* General Ledger * Accounts Payable

* Accounts Receivable * Order Entry

* Procurement * Bar Code Reading

* Inventory * Fixed Assets

* Cash Management * Investments

* Stocks * Bonds

* Invoice and Shipping * Payroll

* Financial Reporting * Electronic Data Interchange

* Sales and Purchasing History * Executive Decision Support System

Provided is a 2005 financial assessment of Riordan Manufacturing. This will evaluate the financial health to determine where improvement is needed.

* Their current ratio is 2:1. This indicates that their assets are twice their liabilities. They have enough liquidity and are able to meet short-term financial goals.

* The debt ratio is .35:1. This measures their financial risk and indicates that they have more assets than debt.

* The profit margin is 22%. This means they have a net income of $0.22 for each dollar of sales. A higher profit margin is a sign that a company has better control over its costs in comparison to its competitors.

* The return on assets is 5%. This indicates that management is not using its assets to generate earnings efficiently. A high ROA number illustrates that the company is earning more money on less investment.

* The P/E Ratio is 11.73. This shows how much investors are willing to pay per dollar of earnings. Some investors see a high P/E as high-priced stock, but it can also indicate the market has aspiration for this stock's future. A low P/E can be seen negatively by the market or it could mean that the market has overlooked it.

Profit margin, and return on assets are areas that have been identified as in need of improvement. An ideal profit margin for the organization would commonly be in the area of 40%. (Many businesses identify an ideal profit margin in the area of 40%.) Improving inventory tracking, cost control, and having sufficient revenue to support the overhead structure are progressive methods to increase profit margin. Methods to improve the ROA include



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