The Clarkson Lumber Company
Clarkson Lumber Company
Dishaun Aboulatifa, Ryan Domingo, Nathan Lugo,
Erika Villaneda, and Heather Williams
California State University, Los Angeles
The Clarkson Lumber Company was established in 1981 which began as a partnership amongst Keith Clarkson and his brother-in-law Henry Holtz. The Lumber Company was located in the Pacific Northwest in a large city in a growing suburb. The company is known for their distribution of lumber goods in the local area, where they have access to railroads and several storage buildings on land in which they owned and were expanding their operations. Their sales increased year after due to their moldings and sash and door products which they purchased in large quantities with substantial discounts. The company had been operating for over a decade and has been trying to expand ever since the launch of the company in 1981.
The Clarkson Lumber Company had been increasing their profits year after year which began in 1993. Despite the consistent profitability in the Clarkson Lumber Company, they had increased its borrowing because of various reasons. Even though the company had good profits the company had experienced a shortage of cash. Mr. Clarkson felt that a large sum loan in the amount of $75,000 would improve profitability by allowing him to take advantage of trade discounts. Mr. Holt also bought out his brother in law’s interest within the company for 200,000 dollars and had two years to pay it off in 1995 and 1996 with 11% interest. Sales volume for the company has been due to successful price competition which occurred because of large quantity purchases of materials and substantial discounts. Therefore borrowing would potentially increase sales for the Lumber Company. By borrowing, Mr. Clarkson has met the financial needs of the company during the periods of 1993 and 1995 by relying heavily on trade credit. He received the maximum loan in the amount of $400,000 from the Suburban National Bank to help
Dishaun Aboulatifa, Ryan Domingo, Nathan Lugo,
Erika Villaneda, and Heather Williams
California State University, Los Angeles
The Clarkson Lumber Company was established in 1981 which began as a partnership amongst Keith Clarkson and his brother-in-law Henry Holtz. The Lumber Company was located in the Pacific Northwest in a large city in a growing suburb. The company is known for their distribution of lumber goods in the local area, where they have access to railroads and several storage buildings on land in which they owned and were expanding their operations. Their sales increased year after due to their moldings and sash and door products which they purchased in large quantities with substantial discounts. The company had been operating for over a decade and has been trying to expand ever since the launch of the company in 1981.
The Clarkson Lumber Company had been increasing their profits year after year which began in 1993. Despite the consistent profitability in the Clarkson Lumber Company, they had increased its borrowing because of various reasons. Even though the company had good profits the company had experienced a shortage of cash. Mr. Clarkson felt that a large sum loan in the amount of $75,000 would improve profitability by allowing him to take advantage of trade discounts. Mr. Holt also bought out his brother in law’s interest within the company for 200,000 dollars and had two years to pay it off in 1995 and 1996 with 11% interest. Sales volume for the company has been due to successful price competition which occurred because of large quantity purchases of materials and substantial discounts. Therefore borrowing would potentially increase sales for the Lumber Company. By borrowing, Mr. Clarkson has met the financial needs of the company during the periods of 1993 and 1995 by relying heavily on trade credit. He received the maximum loan in the amount of $400,000 from the Suburban National Bank to help