Advantages to conform to local norms (localization)
- It helps to improve the image of subsidiaries.
- Too much debt is not good for the investors as they find it too risky to invest.
- Not enough debt can be interpreted as being an insensitive MNE to local monetary policy.
- Local debt positions you at the same level of your competitors being no unfair competition... displayed 300 characters
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Disadvantages to conform to local norms (localization):
- Cannot overcoming imperfection in national capital market
- The consolidated balance sheet may have little sense as is not strictly attached to any specific procedure.
- Local debt must be guaranteed by the parent firm.
- A possible solution could be to minimize both the subsidiaries and the parent firms cost of capital as the international and the domestic firm pursue the same objective... displayed next 300 characters
It is the return on assets. The higher the ROA number, the better, because the company is earning more money on less investment.
- The ROA for Riordan manufacturing (2005) =
1,956,371 / 34,592,182 = 5...
Riordan also exhibits possible concerns with its accounts receivables and inventory levels. The company has a receivable turn of 8.67, meaning that it takes and average of 42 days for its customer to pay on its bills...
Riordan does not have enough cash to pay off its current liabilities and long-term debt. This may mean that Riordan is having problems converting assets to cash, and may be danger of bankruptcy--comparing its cash to its debts shows that Riordan appears to be relying on long-term debt to survive...
Sales and Marketing
The sales and marketing division of Riordan Manufacturing has critical business systems issues to address. Their main issue is that they have historical records saved in numerous databases, as well as on paper and microfiche...
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