Cartwright Lumber Case Summary
RECOMMENDATION
I recommend that Cartwright Lumber should extend a line of credit up to maximum amount of $465,000 by Northrop National Bank. However, it should be taken some additional measures. In addition, Cartwright should develop a sustainable business strategy. These strategies based on extended and ongoing retail distribution, hiring sales representatives for telephone ordering and restructuring of sales department.
As a result of this will be expected an improvement in enter and the target stock price will be $46 per share in the first year. At the end of financial project in 2008, the improvement per share will be $66 (compare to year 2004) and the stock price will be $102. At the end of assumption, increasing in the enterprise value will be in the amount of $659,000 (see Appendix).
RATIONALE FOR DECISION
Cartwright Lumber’s operations were limited to detail distribution of limber products in the local area. Sales volume had been built up largely on the basis of successful price competition., mode possible by careful control of operating expenses and by quantity purchases of materials of substantial discount. No Sales representatives were employed, orders being taken exclusively over the telephone. The employees numbered …show more content…
We used 20% required rate of return that the company is small and market can be risky. After or projection in the next five years, the improvement per share will be $66 (compare to year 2004) and the stock price will be $102. Mr. Cartwright should extend the credit in the amount of $465,000 by Northrop National Bank. In addition, he should change his company’s strategy to survey in the lumber market. This is play to win and to survive. Of course, he can sell his company or he can find a partner, but he doesn’t want to lose his power on company. Therefore, he should take the power and attack the market to increase his company’s market
I recommend that Cartwright Lumber should extend a line of credit up to maximum amount of $465,000 by Northrop National Bank. However, it should be taken some additional measures. In addition, Cartwright should develop a sustainable business strategy. These strategies based on extended and ongoing retail distribution, hiring sales representatives for telephone ordering and restructuring of sales department.
As a result of this will be expected an improvement in enter and the target stock price will be $46 per share in the first year. At the end of financial project in 2008, the improvement per share will be $66 (compare to year 2004) and the stock price will be $102. At the end of assumption, increasing in the enterprise value will be in the amount of $659,000 (see Appendix).
RATIONALE FOR DECISION
Cartwright Lumber’s operations were limited to detail distribution of limber products in the local area. Sales volume had been built up largely on the basis of successful price competition., mode possible by careful control of operating expenses and by quantity purchases of materials of substantial discount. No Sales representatives were employed, orders being taken exclusively over the telephone. The employees numbered …show more content…
We used 20% required rate of return that the company is small and market can be risky. After or projection in the next five years, the improvement per share will be $66 (compare to year 2004) and the stock price will be $102. Mr. Cartwright should extend the credit in the amount of $465,000 by Northrop National Bank. In addition, he should change his company’s strategy to survey in the lumber market. This is play to win and to survive. Of course, he can sell his company or he can find a partner, but he doesn’t want to lose his power on company. Therefore, he should take the power and attack the market to increase his company’s market