Cartwright Lumber Company case
ID #: 502
Name of the 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 local area. Plywood, moldings, and sash and door are some of the typical products of the company. In recent years, the company experienced a rapid growth and expects a substantial increase in sales in the spring of 2004. Despite this, the company had experienced a shortage in cash and considers closing that gap by borrowing. There are two options available: borrow up to $250,000 secured loan from Suburban Bank or open a line of credit up to $465,000 with Northrop Bank. Further analysis of firm’s financials and foreseeable growth is needed to be able to choose from two options.
Marketing Analysis As reported by a bank investigator, the sales are expected to reach $3.6 million in 2004 and may even exceed that level if the prices of lumber rises. The company sells its products for two purposes: new housing construction and repair. In times of economic downturn, sales going to new constructions may decrease, but high proportion of the firm’s repair business will keep the sales in relatively high levels. The sales increased 18% in 2002 and 33% in 2003 and are expected to keep growing at 33% for foreseeable future, which is a good signal for lenders.
The driving force behind the company’s sales growth is successful price competition by having tight control over operating expenses and purchasing materials at discounts. About 55% of total sales are made in the period from April through September, so the demand is seasonal. I believe, the
Name of the 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 local area. Plywood, moldings, and sash and door are some of the typical products of the company. In recent years, the company experienced a rapid growth and expects a substantial increase in sales in the spring of 2004. Despite this, the company had experienced a shortage in cash and considers closing that gap by borrowing. There are two options available: borrow up to $250,000 secured loan from Suburban Bank or open a line of credit up to $465,000 with Northrop Bank. Further analysis of firm’s financials and foreseeable growth is needed to be able to choose from two options.
Marketing Analysis As reported by a bank investigator, the sales are expected to reach $3.6 million in 2004 and may even exceed that level if the prices of lumber rises. The company sells its products for two purposes: new housing construction and repair. In times of economic downturn, sales going to new constructions may decrease, but high proportion of the firm’s repair business will keep the sales in relatively high levels. The sales increased 18% in 2002 and 33% in 2003 and are expected to keep growing at 33% for foreseeable future, which is a good signal for lenders.
The driving force behind the company’s sales growth is successful price competition by having tight control over operating expenses and purchasing materials at discounts. About 55% of total sales are made in the period from April through September, so the demand is seasonal. I believe, the