Clarkson Lumber Company Essay
Clarkson Lumber Case
I. Statement of Problem.
The basis of Clarkson Lumber Companies problems occurs from their rapid growth in the recent years. Sales have increased by 54.7% from 1993 to 1995; assets have increased by 78.12%, while net income has only increased by 28.33%. In order to support these growth patterns, Mr. Clarkson has been required to rely on loans in order to have sufficient funds. Also, Mr. Clarkson decided to buy out his old partners Holtz’ interest in the company. Clarkson got the maximum amount of financing possible with Suburban National Bank, 399,000, so they need to look for alternative financing in order to support this growth.
II. Statement of Facts and Assumptions.
We projected that Clarkson’s profitability …show more content…
It allows Clarkson lumber company to do a lot more with their business, but it comes up just short of what is required. Obviously our analysis is under the guidelines that the growth of all aspects of the company will increase at the same 22% amount that has been demonstrated in their sales area. Our team suggests that the bank not loan the Clarkson Lumber Company the amount listed. Clarkson Lumber has some problems, but they all stem from the fact the loan limits are low and their customers take an increased amount of time to pay. Their risk stems from the fact that the loan value is just going to come up short of the amount they need. However if some changes were made to investments and a minor turn around in their receivable time, this could become a whole new discussion. Clarkson Lumber does have a lot of potential, as you can see from our exhibits, sales, net income, and return on equity have all increased in the recent years and continue to show that trend. The bank could go the route of lending the money on the terms that if Mr. Clarkson fails to pay back the amount borrowed, the company has been showing enough potential to perhaps acquire and sell for a
I. Statement of Problem.
The basis of Clarkson Lumber Companies problems occurs from their rapid growth in the recent years. Sales have increased by 54.7% from 1993 to 1995; assets have increased by 78.12%, while net income has only increased by 28.33%. In order to support these growth patterns, Mr. Clarkson has been required to rely on loans in order to have sufficient funds. Also, Mr. Clarkson decided to buy out his old partners Holtz’ interest in the company. Clarkson got the maximum amount of financing possible with Suburban National Bank, 399,000, so they need to look for alternative financing in order to support this growth.
II. Statement of Facts and Assumptions.
We projected that Clarkson’s profitability …show more content…
It allows Clarkson lumber company to do a lot more with their business, but it comes up just short of what is required. Obviously our analysis is under the guidelines that the growth of all aspects of the company will increase at the same 22% amount that has been demonstrated in their sales area. Our team suggests that the bank not loan the Clarkson Lumber Company the amount listed. Clarkson Lumber has some problems, but they all stem from the fact the loan limits are low and their customers take an increased amount of time to pay. Their risk stems from the fact that the loan value is just going to come up short of the amount they need. However if some changes were made to investments and a minor turn around in their receivable time, this could become a whole new discussion. Clarkson Lumber does have a lot of potential, as you can see from our exhibits, sales, net income, and return on equity have all increased in the recent years and continue to show that trend. The bank could go the route of lending the money on the terms that if Mr. Clarkson fails to pay back the amount borrowed, the company has been showing enough potential to perhaps acquire and sell for a