As a financial consultant to Clarkson Lumber, I analyzed four potential scenarios with relatively high probabilities of occurring given Clarkson Lumber’s current situation. The four scenarios analyzed are continued rapid growth of Clarkson Lumber with Suburban Bank as the creditor, slowed growth with Suburban Bank as the creditor, continued rapid growth with Northrup Bank as the creditor, and controlled rapid growth with Northrup bank as the creditor.…
Lawson is a clothing retailer who has recently met with a bank official asking them for a couple of new services from the bank. The first new service that they have requested is a bank loan that would be used to pay down their trade debt. Their current interest rate on the trade debt is 13.5% and the owner of Lawson, Paul MacKay, feels that he can secure a bank loan that would in turn have a lower interest rate. The second new service that they have requested is a line of credit, the line of credit would be used to help, when the sales are down and cash flow is short. Paul feels that a line of credit will ensure that the store will be able to meet their debt obligation with their main trade supplier.…
The first bank loan of $194, 000 was planned to be used to pay off the significant trade debt with his primary supplier, Forsyth Wholesale Ltd (FWL). The second debt of 26, 000 he would then use to assist with his monthly cash shortage. From the excessive amount of $217, 236 trade debts yet to be paid to FWL, Mackay has been paying a tax penalty of 13.5 per cent on $193, 668. Furthermore, in 2003 FWL financed the expansion of Lawsons store size to raise future sales. Hence, this expansion cost a total of $36, 000 and was added to the company’s trade debt. The sole purpose was proved to be indeed helping increase sales volume based on the 2003 sales results. The main question remains at this point, after the analysis of ratios and projected statements, should Lawsons be approved for a loan grant from the bank?…
Following a brief meeting with his senior managers, Doug and his team decided that this 9.5 million dollar loan from the bank is the only way to keep their business alive. They have decided to reverse their current policy of aggressive price drops and easy credit, reduce their administrative, selling and miscellaneous expenses, not acquire any new fixed assets or sell common stock, decrease accounts payable, stop paying dividends, and freeze executive salaries. All this is an attempt to prove to the bank that Sweet Dreams Inc. is taking their financial situation very seriously and that the bank should strongly consider giving SDI the 9.5 million dollar loan.…
A $8 million loan is abnormal for the bank. The companies management does not appear to understand the unrealistic debt…
Jackie Patrick, a newly appointed loans officer for the Commercial Bank of Ontario, needs to make a decision about whether or not to accept the request for a $194,000 bank loan and a $26,000 line of credit from Paul Mackay, sole proprietor of Lawsons, a general merchandising retailer in Riverdale, Ontario. A closer look indicate that this request would certainly require careful attention and scrutiny.…
From the start, associates were able to offer the best customer service in the industry, guiding…
UpBeat, Inc. is a successful company located in Greenville South Carolina. Sales have substantially exceeded budgeted amounts and look to get even better. Upon reviewing of the monthly reporting package and cash flow projections it can be noted that the debt to equity ratio has deteriorated, liquidity is tight, and the company is having difficulty keeping current on taxes and on payments to suppliers and employees. In order to meet UpBeat’s debt covenants the local bank has agreed to purchase $50 million of accounts receivables following provisions included in the sale agreement:…
A General financial statement summary is important when requesting a loan for expansion or any other reason like inventory purchases or debt retirement. The Tootsie Roll Company has four important financial statements that reflect important information in order to obtain their loan. Ahead I will explain the details relevant to the Tootsie Roll Company in relation to their revenues, retained earnings, cash inventories and cash flows. Each of these statements show important information and ahead I will point out certain numbers that are worth highlighting. Annexed at the end of this paper are the Tootsie Roll Statements.…
Experiencing rapid growth in business and generating fairly good profits, Mr. Keith Clarkson the sole owner and president of The Clarkson Lumber Company still faced a shortage of cash and found it necessary to increase his borrowings, he was therefore on a look-out to start off a new banking relationship where he could not only borrow a larger loan amount but also one that did not require a personal guarantee attached.…
was to act as the "lender of last resort". That is, when risky business prospects made commercial…
Better Days Ahead, a charitable organization, has a standing agreement with First National Bank. The agreement allows Better Days Ahead to overdraw its cash balance at the bank when donations are running low. In the past, Better Days Ahead managed funds wisely, and rarely used this privilege. Jacob Henson has recently become the president of Better Days. To expand operations, Henson acquired office equipment and spent large amounts on fundraising. During Henson’s presidency, Better Days Ahead has maintained a negative bank balance of approximately $10,000.…
1. How would you classify Forest Hill Paper Company in terms of size and ownership?…
After analyzing the company’s costing procedures, the traditional costing system has a very different outcome for the profit as opposed to the activity based costing system. To get the profit for…
Furthermore, the income statement forecast showed that the company would continue to experience negative returns and profits in the next few years. Its heavy investment in research and development (R&D) costs leads to disproportionate operational expenses, which subsequently results to net losses. Due to the reduced liquidity and heightened financial leverage of AMT, the group believes that providing lending funds to AMT would be risky to WNB since the company’s ability to repay the debt and interest obligations were found to be doubtful.…