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
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Case Study: Clarkson Lumber Company Albert M. Aguirre February 11‚ 2012 1. Mr. Clarkson needed to borrow money to address the shortage of cash coming in. Although the business was profitable the bulk of the assets of the company were in its receivables and inventory. The current loan that it gets from Suburban National Bank is not enough to supplement the cash flow that it gets versus the projected expenses that the company had to pay and was maturing. There were also notes payable to
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Butler Lumber Company Background: Butler Lumber Company had been founded in 1981 in a suburb of a large city in the Pacific Northwest. The company s operations were limited to the retail distribution of lumber products. Their typical products included plywood‚ moldings‚ and sash and door products. Despite good profits Butler Lumber Company experienced a shortage in cash and found it necessary to increase its bank loans. Issues: y y Why does a Profitable company such as Butler Lumber need external
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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
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The Butler Lumber Company 1) Is Butler Lumber a profitable business? 2) Why does Mr. Butler have to borrow so much money to support their business? 3) Prepare pro forma income statement and balance sheet. Is Mr Buttler’s estimate loan requirement correct? What amount will he need to finance the expected sales increase? 4) As his financial advisor‚ would you support this expansion? As his banker‚ would you approve the loan and under what conditions? 1) The Butler Lumber Company has positive
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Harvard Business School 9-297-028 Rev. October 29‚ 1996 Clarkson Lumber Company After a rapid growth in its business during recent years‚ the Clarkson Lumber Company‚ in the spring of 1996‚ 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
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I. Introduction Clarkson Lumber Company has been in growth during recent years and anticipated a further increase in sales. Despite of consistent profits‚ the company has suffered shortage of cash and borrowed fund needed for its business growth. Question #1 Increasing amount of borrowing despite of its consistent profitability came from following reasons. First is the firm’s financial position. As sales have increased by 60% from 1993-1995‚ the assets that support increase of sales increased
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I. Overview and Introduction The Clarkson Lumber Company is a classic case of a small‚ private company rapidly growing and not having a sufficient cash flow to sustain operations with the increase in expected future sales. First‚ there needs to be an analysis of the events and strategies that have been implemented which affect the company’s financials. The owner‚ Keith Clarkson‚ bought out his partners “interest” in the company by issuing a note of $200‚000 at 11% interest. The owner issued
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benefit from trade discounts. In order to examine operational performance of Clarkson Lumber Company‚ we calculated financial ratios for years 1993 to 1996 first quarter. In addition‚ to make a meaningful comparison‚ we calculated financial ratio for industry. Industry averages were calculated by taking arithmetic average of high-profit and low-profit outlets‚ then we calculated ratios. Financial ratios of Clarkson Lumber and industry averages can be seen in Exhibit 1. First of all‚ regarding current ratio
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Pre-work for Clarkson Lumber Prof. Ben J. Sopranzetti 1. Do a Porter’s five forces analysis for Clarkson Lumber. 2. Do a SWOT analysis for Clarkson Lumber. 3. Think about how each of the factors in the Porter and SWOT analyses affects the expected cash flows‚ the risk of those cash flows‚ and the timing of the cash flows. 4. Why does the firm have to borrow so much money to support this profitable business? Where is its money going? Try your hand at doing a funds flow statement. 5
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