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.

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.

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