IW 50 Best U.S. Manufacturers -- 2010 Methodology

June 16, 2010

The IW formula factors in revenue growth, profit margins, return on equity, return on assets and asset turnover, and inventory turns.

Adrienne Selko

For the first time in the IW Best Manufacturing Companies history, IndustryWeek ranked the top 50 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.

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.

While the rankings are not an exact science since industrial sector averages can vary from one another, IW decided it was time to recognize manufacturers on the list that excelled in financial and operational performance over the past three years. The six variables are weighted with the most recent year, 2009, contributing 50% of the calculation, 2008 weighted at 30% and 2007 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 2010 IW 50 Best Manufacturing Companies list with Web-exclusive profiles and data.

About the Author

Adrienne Selko | Senior Editor

Focus: Workforce, Talent

Follow Me on Twitter: @ASelkoIW

Bio: Adrienne Selko has written about many topics over the 17 years she has been with the publication and currently focuses on workforce development strategies. Previously Adrienne was in corporate communications at a medical manufacturing company as well as a large regional bank. She is the author of Do I Have to Wear Garlic Around My Neck? which made the Cleveland Plain Dealer's best sellers list. She is also a senior editor at Material Handling & Logistics and EHS Today.

Editorial mission statement: Manufacturing is the enviable position of creating products, processes and policies that solve the world’s problems. When the industry stepped up to manufacture what was necessary to combat the pandemic, it revealed its true nature. My goal is to showcase the sector’s ability to address a broad range of workforce issues including technology, training, diversity & inclusion, with a goal of enticing future generations to join this amazing sector.

Why I find manufacturing interesting: On my first day working for a company that made medical equipment such as MRIs, I toured the plant floor. On every wall was a photo of a person, mostly children. I asked my supervisor why this was the case and he said that the work we do at this company has saved these people’s lives. “We never forget how important our work is and everyone’s contribution to that.” From that moment on I was hooked on manufacturing.

I have talked with many people in this field who have transformed their own career development to assist others. For example, companies are hiring those with disabilities, those previously incarcerated and other talent pools that have been underutilized. I have talked with leaders who have brought out the best in their workforce, as well as employees doing their best work while doing good for the world.