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I. Key Issues Overview When Cartwright Lumber Company was originally founded, it was owned by both Mark Cartwright and Henry Stark. However, Cartwright bought out Stark’s interest for $105,000 and became sole owner of the company. To finance this payment, Henry took out a $70,000 loan with an interest rate of 11% secured by land and buildings payable over 10 years at a rate of $7,000 each year. 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…show more content…
Those were within acceptable level. Besides the liquidity, the working capital was keeping increasing from $ 208 thousand to $ 242 thousand. 4. Cash Flow Based on the income statement and balance sheet, we can get the cash flow statement for year 2002, 2003 and the first quarter of 2004. From the cash flow, it is obviously see that the main use of fund is for operations, materials purchasing, wages payment, interest payment etc. While the source of fund is from financing, bank loan and trade notes payables. III. Credit Assessment & Industry Analysis With understanding of historical financial situation, we still need to know how company’s credit report demonstrates. And for a corporate form of organization, how it plays about the owner of the company’s personal credit. 1. Credit Assessment on Company Company Credit Assessment: For the Cartwright Lumber could get 2% discount payment within 10 days from suppliers, but it had taken few purchase discount because of the shortage of funds, while there was no bad record of lagged payment, so the company still owned good credit assessment. 2. Credit Assessment on Mark Administer Credit Assessment: Mark Cartwright was the sole owner of Cartwright Lumber Company. Per one of his supplier evaluated, Mark kept close check on his own credits, and had good personality. 3. Industry Analysis Situation for Cartwright Lumber were good. It was located in the growing suburb of a big city.
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