Clarkson Lumber Co. 1. Why does Mr. Clarkson have to borrow to support this profitable business? A. This company now faced the cash shortage trouble which we can see from its liquidity‚ such as current ratios‚ quick ratios and return on sales for these three years‚ following a decreasing trend. From accounts receivable statistics‚ we learn the cash inflows is decreasing since it takes longer time to collect the money from customers. And they still need to pay for purchases‚ so borrowing from
Premium Finance Balance sheet Asset
Clarkson Lumber Company Situational Overview: Clarkson Lumber Company or the “Company” has encountered financial troubles in the midst of expanding revenues. In order to satisfy the demands of expansion and continue growing top line revenue‚ an increased amount of borrowing is necessary. This increased borrowing will be in the form of a revolving line of credit with an interest rate of 11%. The following paragraphs will examine what has led to the Company’s current illiquidity and what can be done
Premium Accounts receivable Revenue Accounts payable
Case 1: Clarkson Lumber As a financial consultant to Clarkson Lumber‚ I analyzed four potential scenarios with relatively high probabilities of occurring given Clarkson Lumber’s current situation. The four scenarios analyzed are continued rapid growth of Clarkson Lumber with Suburban Bank as the creditor‚ slowed growth with Suburban Bank as the creditor‚ continued rapid growth with Northrup Bank as the creditor‚ and controlled rapid growth with Northrup bank as the creditor. Clarkson Lumber’s
Premium Finance Risk Debt
Statement of the Problem At first glance‚ Clarkson Lumber appears to be a healthy company. However‚ despite rapid growth and increasing sales Clarkson Lumber finds itself searching for additional funding to compensate for a shortage in cash to fund its expanding business. Clarkson Lumber is in this situation for a number of reasons. The company’s inability to receive payments from customers in a timely manner created a severe impact in the company’s cash flows. The age of account receivables
Premium Balance sheet Accounts receivable Generally Accepted Accounting Principles
Clarkson Lumber’s Company Case Analysis Part 2 GROUP A: ANA GABRIELA SOTILLO JOHNSON FABIAN FREIHERR VON ROSEN IMRE IGNACIO SZAPARY GIL-CASARES RAYAN SEIF STEFAN RADISAVLJEVIC VERENA RIEDHART YANIS ALEM IE business School Section 4 September 2014 Question 1. How attractive is it to take the trade discounts? In order to determine how attractive it is to avail the trade discounts‚ Clarkson should calculate his annualized interest rate which he can get in return if he avails the trade
Premium Cash flow Inventory Generally Accepted Accounting Principles
Clarkson Lumber Case FIN 4422-002 Spencer Ely September 22‚ 2011 Clarkson Lumber appears at first glance to be a healthy‚ successful company with increasing sales and rapid growth. Clarkson Lumber has relatively low operating cost‚ allowing them to give competitive prices‚ which results in their increasing sales. However‚ even with continual increases in sales‚ Clarkson Lumber has a constant cash flow problem that can be credited to several factors with the result of looking for additional
Premium Finance Debt Marketing
should address: 1. Why has Clarkson Lumber Company borrowed increasing amounts despite its consistent profitability? In order for Clarkson to keep up with an increase in sales‚ they need to borrow additional funds to increase their purchase order sizes. 2. How has Mr. Clarkson met the financing needs of the company during the period 1993 through 1995? Has the financial strength of Clarkson Lumber improved or deteriorated? During the last 3 years‚ Clarkson has used its line of credit
Premium Finance Debt Interest
ANÁLISIS DEL CASO ’CLARKSON LUMBER COMPANY’ FINANZAS OPERATIVAS 2007 MBA - UNC : : DEL RÍO - GARCÍA - GARZÓN - GOMEZ MENA - PERNASETTI - SALOMÓN : : MAYO 2007 � _RESOLUCIÓN DEL CASO_ ¿POR QUÉ LA COMPAÑÍA TUVO QUE SOLICITAR PRÉSTAMOS EN FORMA SOSTENIDA A PESAR DE SU ALTA RENTABILIDAD? ¿PARA LOGRAR UN RÁPIDO CRECIMIENTO EN LAS VENTAS SIEMPRE ES NECESARIO FINANCIAMIENTO EXTERNO? La empresa Clarskon Lumber Company‚ se encuentra actualmente en un proceso de fuerte crecimiento‚ registrando incrementos
Premium Empresa Estado
Clarkson Lumber Company 1. Identify the key problem in the case and explain why it is the key problem. Clarkson Lumber Company’ sales have been growing quickly over the last couple of years. Growths in working capital necessities have surpassed the capacity of the company to produce funds by itself. Also‚ part of the finances was used to buy out a partner‚ further raising the pressure. The company couldn’t appreciate discounts on accounts payable and started borrowing larger funds from the bank
Premium Working capital Financial ratios Finance
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
Premium Accounts receivable Generally Accepted Accounting Principles Balance sheet