Butler Lumber 1. Why does BL need to borrow money to support its profitable business? Draw up a Fund Flow Statement‚ i.e.‚ Funding and Uses a. Funding would include Bank Borrowing‚ Trade Credit‚ Retained Earnings‚ Cash‚ Accrued Expenses b. Uses would include Inventories‚ A/R‚ Buyout‚ Reduction in debt‚ increase in fixed assets/accounts Response: BL needs to borrow money from the bank to take benefit of the purchase discounts. During the last two years‚ BL had taken very few purchase discounts
Premium Money Finance Generally Accepted Accounting Principles
business: Cartwright Lumber Company Nature of the business: Retail distribution of lumber products Overview The Cartwright Lumber Company had been found in 1994 as a partnership by Mark Cartwright and his brother-in-law Henry Stark. Later in 2001‚ Mr. Cartwright bought out Stark’s shares and incorporated the business. Now‚ Mr. Cartwright is a sole owner and president of the company. The business is located in the Pacific Northwest region and does the retail distribution of lumber products in the
Premium Accounts receivable Financial ratios
Clarkson Lumber Case FIN 4422-002 Spencer Ely September 22‚ 2011 Clarkson Lumber appears at first glance to be a healthy‚ successful company with increasing sales and rapid growth. Clarkson Lumber has relatively low operating cost‚ allowing them to give competitive prices‚ which results in their increasing sales. However‚ even with continual increases in sales‚ Clarkson Lumber has a constant cash flow problem that can be credited to several factors with the result of looking for additional
Premium Finance Debt Marketing
Statement of the Problem At first glance‚ Clarkson Lumber appears to be a healthy company. However‚ despite rapid growth and increasing sales Clarkson Lumber finds itself searching for additional funding to compensate for a shortage in cash to fund its expanding business. Clarkson Lumber is in this situation for a number of reasons. The company’s inability to receive payments from customers in a timely manner created a severe impact in the company’s cash flows. The age of account receivables
Premium Balance sheet Accounts receivable Generally Accepted Accounting Principles
Clarkson Lumber Company Situational Overview: Clarkson Lumber Company or the “Company” has encountered financial troubles in the midst of expanding revenues. In order to satisfy the demands of expansion and continue growing top line revenue‚ an increased amount of borrowing is necessary. This increased borrowing will be in the form of a revolving line of credit with an interest rate of 11%. The following paragraphs will examine what has led to the Company’s current illiquidity and what can be done
Premium Accounts receivable Revenue Accounts payable
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
Premium Finance Debt Marketing
CASE #0 Butler Lumber Company Analysis I. Conclusion Based on the information and corresponding financial statements provided‚ we concluded that: Bulter Lumber Company has to collect money from outside resources to compensate its funding gap of 383‚000 USD. From the perspective of banker‚ we won’t approve Mr.Butler ‘s loan request From the perspective of firm’s financial advisor‚ it is better to finance from new shareholders than to borrow from bank. II. Analysis i. Funding gap There
Premium Accounts receivable Balance sheet Generally Accepted Accounting Principles
Kilkenny Lumber Case Study Assignment Part I 1. Productivity of the crew would be below standard. I believe for the productivity to be below standard because they were sent to this crew because of their lack of work. Just because they have been assigned to another crew‚ does not mean that they will begin to work well right away. When compared to the Equity Theory‚ I believe there to be positive inequity for the three men assigned to the new group. For being assigned to the group due
Premium Motivation 2006 singles Force
Clarkson Lumber Company Solutions Questions: 1.What problems does Clarkson Lumber face? 2.Why does Mr. Clarkson have to borrow money to support this profitable business? 3.Is a line of credit of $ 750‚000 sufficient to meet the firm’s future financial needs? 4.As a banker‚ would you approve Mr. Clarkson’s loan request‚ and if so‚ what conditions would you put on the loan? 1. The Problem Defined: The Clarkson Lumber Company has been expanding rapidly for several years. Increases in working
Premium Finance Debt Balance sheet
Cartwright 1. Why has Cartwright Lumber borrowed increasing amounts despite its consistent profitability? Cartwright lumber has had to borrow substantial amounts of money due to the fact that the firm is a growing company with sales rising quickly. In order for the company to sustain this growth rate‚ they will have to get additional external funding. Growth in sales nearly doubled from 2001 to 2003‚ with a percentage growth of 18% and 34% in 2002 & 2003 respectively. While sales are growing steadily
Premium Balance sheet Finance Debt