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IW 50 Best Manufacturers: Methodology

July 18, 2011
How IW ranked the Top 50

IndustryWeek ranked its 2011 50 Best Manufacturers based on performance in revenue growth and profit margin as well as four other financial measures that include:

Inventory turns (cost of goods sold/average inventory): Indicates how frequently a manufacturer's inventory is sold over the course of a year. Measure varies dramatically by industry; operations with higher inventory turns will require less capital to finance their business.

Asset turnover (revenues/total assets): This ratio measures how efficiently assets produce sales. Comparing two companies in the same industry, the firm with higher asset turns is using its assets more productively.

See the 2011 IW 50 Best Manufacturing Companies list with Web-exclusive profiles and data.

See the Top 5 Best Manufacturers Slideshow

Read "Technology Takes Over IW 50 Best Manufacturers Ranking"

Return on assets (net income/total assets): Another measure of asset utilization, ROA brings profitability into the analysis.

Return on Equity (net income/shareholders' equity): ROE shows how successful management is at maximizing the return on shareholder investment in a company.

The six variables are weighted with the most recent year, 2010, contributing 50% of the calculation, 2009 weighted at 30% and 2008 contributing 20%. In instances where the company did not report a particular financial metric, that manufacturer received the lowest-possible score for that category.

See the 2011 IW 50 Best Manufacturing Companies list.

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