Butler Lumber Case Study Solution Options: The Butler Lumber Company (BLC) could obtain from Suburban National Bank maximum loan of $250‚000 in which his property would be used to secure the loan. Northrop National Bank is considering BLC a line of credit (LOC) of up to $465‚000. BLC would have to sever ties with Suburban National if they were to have this LOC extended to them. | 1988 | 1989 | 1990 | 1991Q1 | EBITDA coverage (times) | 2.5 | 2.26 | 2.15 | 2.1 | Debt Equity Ratio
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Case: Clarkson Lumber Company Issues The issues that Mr. Clarkson should consider when analyzing the future of his business are: • Can the business support growing at such a high rate? • Is it a wise decision to continuing borrowing on an even higher line of credit? • Is the business making wise choices in regards to whom it sells to? Decision The business cannot support the current rate of growth much longer. Mr. Clarkson has no choice but to infuse the business with outside cash
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Suzy Porter is a fourth grade‚ public school‚ student with mild cerebral palsy. It has not been determined which type of cerebral palsy she has‚ whether it is spastic‚ athetoid‚ ataxic or mixed. However‚ it is known that she has some difficulty with her gross and fine motor skills. She has a learning disability and difficulty with penmanship which is probably due to her limited fine motor skills. Currently‚ Suzy spends the majority of the school day in a regular classroom where she receives one on
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BUTLER LUMBER COMPANY CASE REPORT Francis Davidson Tanguay Paula Zalba Dounia Tazimezalek Carl Helou Applied Corporate Finance Larbi Hammami McGill University‚ Montreal Tuesday‚ May 14th‚ 2013 1. Problem 1.1 Why was sales growth so robust‚ but net income growth anemic at best? 1.2 Does Mr.Butler need additional funding to fuel his growth? 1.3 Why does butler lumber have a cash shortage problem to begin with? 1.4 Could the cash flows of Butler Lumber support additional debt? 1.5 Should butler lumber
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Q1-1. Why has Clarkson Lumber borrowed increasing amounts despite its consistent profitability? Because they have faced cash shortage trouble. Their profitability has grown for 1993 ~ 1995 period‚ as we can see from their I/S (e.g. Sales and Net Income‚ etc.). However‚ as its business size grows‚ their A/R increased‚ which means that it is getting difficult to collect cash. On the other hand‚ A/P decreased for the same period‚ which means that the company paid cash for A/P‚ resulting in critical
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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
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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
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Clarkson Lumber Company Group 8 Connor Caruso Leah Chambers Eugene “Trey” Nolfi Trevor Landry (Rough Draft) Summary of facts: Clarkson Lumber Company is a top lumber supplier in the Pacific Northwest and was founded in 1981 as a partnership between Mr. Clarkson and his brotherinlaw‚ Henry Holtz. In 1994‚ Mr. Clarkson bought out Mr. Holtz’s share in the company for $200‚000. Sales for Clarkson Lumber Company has seen rapid growth‚ increasin
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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
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Butler Lumber Company Case Butler Lumber Company Case Summary of facts: In 1981 by Mark Butler and his brother-in-law Henry Stark founded the Butler Lumber Company. In 1988 Mr. Butler bought Mr. Stark’s share for $105‚000 to be paid of in 1989 out of which $70‚000 was raised by a loan carrying an interest rate of 11% and repayable at the rate of $7‚000 over the next 10 years. Over the past five years‚ Butler Lumber Company has experienced rapid growth in its business. It derives its business
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