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
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FINANCIAL STATEMENT OVERVIEW ASSIGNMENT # 3 Members: Zhishuang Liu Siyi Shang Qihui Wu Anqi Li Context 1 Assumptions (1) Interest Income grows at a certain rate every year. (2) There is no issue of new shares (3) There are tendencies of the ratios‚ such as net interest income margin‚ net income margin‚ return on asset‚ return on equity‚ etc.‚ that could be used for forecasting. (4) Simplify the accounts of Balance Sheet‚ Income Statement and Cash Flow Statement
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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
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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
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Exhibit 1 Pro Forma Balance Sheets Under Seasonal Production‚ 1994 (thousands of dollars) Actual Dec. 31‚ 1993 Casha Accounts receivableb Inventoryc Current assets Net plant and equipmentd Total assets Accounts payablee Notes payable‚ bankf Accrued taxesg Long-term debt‚ current portion Current liabilities Long-term debth Seasonal Liabilities Shareholders’ equity Total liabilities and equity Jan. Feb. Mar. Apr. May July Aug. Sept. Oct. $200 2‚905 586 $878 1‚060 586 $1‚526 260 586 $1
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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
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Running head: CAPSTONE PROJECT Capstone Project- MGT660 Capstone Project- MGT660 A pro forma income statement is a projection of future business profits and losses. It allows the business to make operational changes that could affect the actual outcome before the projections are reality. The pro forma income statement for Once Upon A Child is a three year projection that accounts for a ten percent increase in gross sales each of the three years. The projections
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A. Documents A. Analysis B1. To make my pro-forma statements I had to plan for future goals‚ I intended to make up the money I used in the first three quarters by quarter 4. I tried to backwards plan by adjusting the numbers to hopefully meet the criteria. Each quarter my cash flow increased by about 300‚000. I did not increase my effectiveness with pro-forma statements or budgets to ensure adequacy of funds. The production capacity in my first 2 quarters was low but only because it
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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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Assumptions. We build pro-forma statement mostly based on the assumptions given in the case. Other assumptions are following. At first‚ we assume that the tax rate is an average of tax rates for the past three years which is 20.1%. We use this tax rate to calculate the provision for income taxes for following years. Next assumption is that we take Mr. Dadge’s approximation for the initial rate as the interest rate‚ 11%. Since Mr. Clarkson finished payment to Mr. Holtz in 1995‚ we assume that only
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