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
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Why does the company need funds? First‚ Butler Lumber Company in the spring of 1991 anticipated a further substantial increase in sales. It means there are more working capital associated with the company’s increasing sales volume. Second‚ although they have good profits‚ the company had experienced a shortage of cash. The company’s current borrowing from Suburan National Bank almost reaches the maximum loan that SN Bank would make. Meanwhile‚ the SN Bank now asks Butler Lumber to secure the loan
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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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CASE #0 Butler Lumber Company Analysis I. Conclusion Based on the information and corresponding financial statements provided‚ we concluded that: Bulter Lumber Company has to collect money from outside resources to compensate its funding gap of 383‚000 USD. From the perspective of banker‚ we won’t approve Mr.Butler ‘s loan request From the perspective of firm’s financial advisor‚ it is better to finance from new shareholders than to borrow from bank. II. Analysis i. Funding gap There
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business: Dawson Lumber Company Nature of the business: Wholesale Lumber Business Marketing Analysis: The Dawson Lumber Company was founded in the 1870s by the Dawson family to market the lumber on their land. In 1950‚ Dawson Lumber owned four small lumber yards in the Corn wall area‚ each operating as a separate company. However‚ in 1965‚ J.H. Dawson became president and amalgamated the four companies into the Dawson Lumber Company. The company had acquired seven more lumber yards north and
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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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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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Butler Lumber Company I. Statement of Financial Problem Butler Lumber Company is facing the internal risk of not having enough borrowing power to continue operations as desired. The owner of the company has established a relationship with a new bank to increase their borrowing power‚ however‚ based on Butler Lumber Company’s past Operating Statement and Balance Sheet‚ the company is expecting to continue substantial growth without considering external risks that may affect their business. Currently
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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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Mark Butler‚ sole owner and president of the Butler Lumber Company has approached George Dodge of the Northrop National Bank with a request for a loan of $465‚000 to finance the company’s anticipated growth in the near future. The company’s current bank cannot provide it with an amount higher than $250‚000‚ a figure too low to meet its substantially large working capital requirements. It is for this reason that Mr. Butler is seeking the new banking relationship. The problem that lies before‚ Mr.
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