wilson Lumber

Better Essays
Wilson Lumber Company
After a rapid growth in its business during recent years, the Wilson
Lumber Company, in the spring of 2006, anticipated a further substantial increase in sales. Despite good profits, the company had experienced a shortage of cash and had found it necessary to increase its borrowing from the Suburban National Bank to $399,000 in the spring of 1996. The maximum loan that Suburban National would make to any one borrower was $400,000 and Wilson had been able to stay within this limit only by relying very heavily on trade credit. In addition, Suburban was now asking that Mr. Wilson guarantee the loan personally. Arne Wilson, sole owner and president of the Wilson Lumber Company, was therefore actively looking elsewhere for a new banking relationship where he would be able to negotiate a larger loan that did not require a personal guarantee. Mr. Wilson had recently been introduced by a friend to George
Dodge, an officer of a much larger bank, the Northrup National Bank.
The two men had tentatively discussed the possibility that the
Northrup bank might extend a line of credit to Wilson Lumber up to a maximum amount of $750,000. Mr. Wilson thought that a loan of this size would improve profitability by allowing him to take full advantage of trade discounts. Subsequent to this discussion, Mr.
Dodge had arrange for the credit department of the Northrup
National Bank to investigate Mr. Wilson and his company.
The Wilson Lumber Company had been founded in 1991 as a partnership by Mr. Wilson and his brother-in-law, Henry Holtz. In
2004, Mr. Wilson bought out Mr. Holtz's interest for $200,000. Mr.
Holtz had taken a note for $200,000, to be paid off in 2005 and
2006 in order to give Mr. Wilson time to arrange for the necessary financing. This note carried an interest rate of 11%, and was repayable in semi-annual installments of $50,000, beginning June
30, 2005.
The business was located in a growing suburb of a large city in

You May Also Find These Documents Helpful

  • Good Essays

    case wilson lumber

    • 440 Words
    • 4 Pages

    Nasirova Aynur Global Finance Case 1: Wilson Lumber Credit analysis on Wilson Lumber as 31.12.1984 Net profit margin Asset turnover Financial leverage RoE RoA 0,0165 2,8851 2,6762 12,7% 4,75% quick ratio current ratio debt to equity ratio debt ratio interest coverage ratio 0,6711 1,4519 1,68 0,63 2,61 The RoE of the company shows that it generated a 12,7 % profit on every dollar invested by shareholders in 1984. Taking into consideration that Wilson Lumber is a small company it can be considered…

    • 440 Words
    • 4 Pages
    Good Essays
  • Powerful Essays

    Wilson Lumber Company

    • 3053 Words
    • 13 Pages

    New Terms 15 1. Introduction Wilson Lumber Company is a small company engaged in timber business. The company has one owner Mr Wilson, an entrepreneur, who is considered to be reliable partner and talented business man by his suppliers and customers. Mr Wilson originally established the firm with his brother in law, Henry Holtz, in 1991 but in 2004, bought out a part of Mr Holtz for USD200,000 payable in two equal parts over the next two years. Mr Wilson is willing to try a discount 2/10 net…

    • 3053 Words
    • 13 Pages
    Powerful Essays
  • Good Essays

    QUESTION 1 WHY HAS WILSON LUMBER BORROWED INCREASING AMOUNTS DESPITE ITS CONSISTENT PROFITABILITY? Although the company seems to be profitable, it has faced shortage of cash. It happened due to increase in Accounts Receivable as well as Inventories. On the other hand, Accounts Payable does not increase that rapidly and difficulties regarding cash collection become evident. Furthermore, the cash collection cycle becomes larger (59 days in year 2003, while more than 70 in year 2006). QUESTION 2…

    • 882 Words
    • 5 Pages
    Good Essays
  • Powerful Essays

    Clarkson Lumber

    • 1188 Words
    • 5 Pages

    hult international business school | Clarkson Lumber Company | | | Adeeb Valiulla | 1/3/2011 | | Summary 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…

    • 1188 Words
    • 5 Pages
    Powerful Essays
  • Good Essays

    Clarkson Lumber

    • 914 Words
    • 4 Pages

    MEMO RE CLARKSON LUMBER TO: John Doe President, Northrup National Bank FROM: George Dodge Loans Officer, Northrup National Bank Clarkson Lumber Company is owned and operated by the hardworking, 49-year-old Mr. Clarkson. It has low operating expenses, a small staff, and strong management. The overall impression is one of a conservative, efficient operation. Clarkson himself leads a frugal lifestyle with little personal debt. Clarkson Lumber is a company experiencing…

    • 914 Words
    • 4 Pages
    Good Essays
  • Good Essays

    The Lumber-Room

    • 926 Words
    • 4 Pages

    The Lumber Room The text under analysis is written by an outstanding British novelist and short story writer Hector Munro. Hector Hugh Munro was a British writer, whose witty stories satirized Edwardian society and culture. The author’s style of writing is satirical in a humorous way. He uses a witty tone to mimic characters in order to subtly criticize them. The criticism is done in a subtle way that is humorous. The excerpt is homogeneous. The story is narrated in the 3rd person…

    • 926 Words
    • 4 Pages
    Good Essays
  • Good Essays

    The Lumber Room

    • 1293 Words
    • 6 Pages

    The Lumber Room The text under analysis is entitled “The Lumber Room” and it is written by an outstanding British novelist and short story writer Hector Munro. Hector Hugh Munro, better known by the pen name Saki, was a British writer. In her Biography of Saki Munro’s sister writes: “One of Munro’s aunts, Augusta, was a woman of ungovernable temper, of fierce likes and dislikes, imperious, a moral coward, possessing no brains worth speaking of, and a primitive disposition.” Naturally the last…

    • 1293 Words
    • 6 Pages
    Good Essays
  • Good Essays

    Butler Lumber

    • 1308 Words
    • 4 Pages

    1. Why has Butler Lumber borrowed increasing amounts despite its consistent profitability? How has Mr. Butler met the financing needs of the company during the period 1988 through 1990? (It would be helpful to develop a cash flow analysis (use vs. source) and the cash flow statement based upon the income statement and the balance sheet provided in the case for the period of 1988 to 1990.) Through the period of 1988 to 1990 Mark Butler has met the needs of financing through decreasing the amount of…

    • 1308 Words
    • 4 Pages
    Good Essays
  • Powerful Essays

    Butler Lumber

    • 1899 Words
    • 8 Pages

    Butler Lumber After thorough review and analysis of Butler Lumber’s financial reports, I believe that it is in the best interest of Northrup National Bank to not only approve the requested $465,000 loan, but look to increase the loan amount. A review of the 5 C’s will show in more detail the decision to approve this loan: 1. Capacity/Cash Flow: Butler runs a lean operation that has allowed them to have success due to competitive pricing. They have met their financing needs by increasing…

    • 1899 Words
    • 8 Pages
    Powerful Essays
  • Powerful Essays

    Butler Lumber

    • 1432 Words
    • 6 Pages

    Butler Lumber Case Study I. Statement of Financial Problem Butler Lumber Company, a growing profitable business has exhausted its credit limit and the key issues facing it are: 1. Need for additional funds to continue the growth 2. Need to consolidate debt 3. Need to improve cash flexibility. In this case study I will be discussing following problem: Why has Butler Lumber been profitable in the increasing volume of sales but at the same time it is experiencing cash difficulties…

    • 1432 Words
    • 6 Pages
    Powerful Essays