Shumann 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
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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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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
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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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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
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Statement of firm’s position Butler Lumber Company is looking for more cash due to a fast-paced lumber market and a shortage of funding. Their regular bank‚ Suburban National Bank‚ is not willing to expand their exiting loan to an amount greater than $250‚000 without securing the loan with real property. Another loan is being offered by a second bank‚ Northrup National Bank‚ for $465‚000‚ with the understanding that the previous loan would be rolled into the second. The interest on the new loan
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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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Butler Lumber Company Background: Butler Lumber Company was founded in 1981‚ in a large city in the Pacific Northwest. Typical products of the company included plywood‚ moldings‚ and sash and door products. After a rapid growth in its business during recent years‚ the company in the spring of 1991 anticipated a further substantial increase in sales. Despite good profits the company experienced a shortage in cash and found it necessary to increase its bank borrowings. Issues: • Butler Lumber
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Nicholas Cappucci Cost Management Systems Professor Wall Butler Lumber 1.Mark Butler has to borrow so much money to support his business because of his plans to expand his business and to consolidate his debt. Receiving the loan will allow Butler to make sure his inventory is ready for the projected sales increase in the coming year. Cash flexibility is also an issue with this company because they have so many outstanding debts‚ getting the loan will improve the cash flexibility. 2.I do
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BUTLER LUMBER COMPANY 關於Butler Lumber Company(以下簡稱BLC)的借貸案，我們選擇站在Northrop National Bank(以下簡稱NNB)的角度來看是否該提供借貸，共考慮三個部份：1)BLC的徵信程度，2)BLC的財務報表狀況，3)BLC的擔保品品質。以下將針對這三方面來探討： 一、BLC的徵信程度 在評估借貸案時，NNB向幾家BLC的往來廠商發函調查，以作徵信之用。回函廠商皆對經營者有信心，以及對BLC本身的營運情況有著正面的看法。 接下來NNB需要評估BLC的財務報表，以了解實際的營運情況。 二、BLC的財務報表狀況 BLC 1988 1989 1990 負債比率 54.55% 58.70% 62.70% 流動比率 180.00% 158.93% 145.05% 速動比率 88.08% 72.00% 66.92% 現金對流動負債比率 22.31% 12.80% 7.66% 存貨週轉天數 71.755 69.631 應收帳款週轉天數
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