Harvard Business School 9-297-028 Rev. October 29‚ 1996 Clarkson Lumber Company After a rapid growth in its business during recent years‚ the Clarkson Lumber Company‚ in the spring of 1996‚ anticipated a further substantial increase in sales. Despite good profits‚ the company had experienced a shortage of cash and had found it necessary to increase its borrowing from the Suburban National Bank to $399‚000 in the spring of 1996. The maximum loan that Suburban National would make to any
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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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I. Overview and Introduction The Clarkson Lumber Company is a classic case of a small‚ private company rapidly growing and not having a sufficient cash flow to sustain operations with the increase in expected future sales. First‚ there needs to be an analysis of the events and strategies that have been implemented which affect the company’s financials. The owner‚ Keith Clarkson‚ bought out his partners “interest” in the company by issuing a note of $200‚000 at 11% interest. The owner issued
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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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I. Introduction Clarkson Lumber Company has been in growth during recent years and anticipated a further increase in sales. Despite of consistent profits‚ the company has suffered shortage of cash and borrowed fund needed for its business growth. Question #1 Increasing amount of borrowing despite of its consistent profitability came from following reasons. First is the firm’s financial position. As sales have increased by 60% from 1993-1995‚ the assets that support increase of sales increased
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and concepts that your team 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
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Beacon lumber analysis Current ratio can measure the ability of the company to paid its short-term debt with their currently resources. The rule of thumb indicated that a company should have the ratio between 1.0 and 2.0. The current ratios of Beacon Lumber during November 2009 to January 2010 are 40.06886782‚ 4.384552725 and 4.551608547 respectively. The current ratios of Beacon Lumber are too high during these three months‚ which means Beacon Lumber is inefficiently using its resource. These
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The Clarkson Lumber Company Case Analysis June 30‚ 2011 beardsrus Leave a comment Go to comments (Note: In retrospect we think that perhaps Clarkson should reduce its expenses and debt first before leveraging itself further. Exhibits not included here) Written April 19‚ 2010 Finance 434 Overview Clarkson Lumber Company is a classic example of a privately held company that has experienced a rapid growth in sales and has reached a point where it is facing a shortage of cash to
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Clarkson Lumber Company 1. Why has Clarkson Lumber borrowed increasing amounts despite its consistent profitability ? Clarkson’s business is growth with average Net Sales 24.50% from year 1993 to year 1995. The Net Sales Q1 year 1996 is achieved 23.50% of Net Sales year 1995. To achieve the target Net Sales year 1996‚ Clarkson should borrow the Loan from other Bank. If not‚ the estimation of achievement Net Sales year 1996 is 4 times of Net Sales Q1 year 1996 or decrease -6.00% of Net Sales
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A Room of One’s Own Summary Virginia Woolf‚ giving a lecture on women and fiction‚ tells her audience she is not sure if the topic should be what women are like; the fiction women write; the fiction written about women; or a combination of the three. Instead‚ she has come up with "one minor point--a woman must have money and a room of her own if she is to write fiction." She says she will use a fictional narrator whom she calls Mary Beton as her alter ego to relate how her thoughts on the lecture
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