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
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Cartwright 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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Cartwright Lumber Company I. Company Background & Situation Cartwright lumber company was located in a suburb of a large city in the Pacific Northwest; its operations were limited to the retail distribution of lumber products in the local area. In 1994‚ Cartwright Lumber Company was established as a partnership by Mark Cartwright and his brother-in-law Henry Stark. However‚ in 2001‚ Cartwright brought out Henry’s interest for $105‚000 and incorporated the company. About 55% of the total sales
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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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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
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quantitative finance programme in Europe. The programme is highly relevant‚ reflecting the strong corporate connections we have established with leading companies in the City of London and beyond‚ providing practical opportunities to build your technical skills and confidence. You will receive handson training‚ working through relevant case studies with leading practitioners and world-renowned research faculty. This innovative teaching approach‚ combined with The Chartered Institute for Securities
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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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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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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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