Clarkson Lumber Company Experienced Significant Sales Growth

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.

There is the possibility that Timken can lose its BBB investment-grade rating. This is due to Timken taking on the $800 million in debt it needs to purchase Torrington. The change in the company’s debt composition will change ratios such as debt-to-capital which is used to determine the investment-grade rating. Compared to other industrial firms, Timken shows relatively high sales numbers ($279.4 million) as well EBITDA figures ($275.7 million). According to table 3 (p. 4), only three ratios will change as taking on the $800 million in debt. The first one is EBIT Interest Coverage Ratio, which drops from 2.63 to 0.90 and investment-rating scale falls from BBB to B. The second ratio is EBITDA Interest Coverage Ratio, which drops from 4.3 to 3.14 and investment-rating scale falls from BBB to B. The third one is Total Debt/Capital Ratio, which increases from 43 percent to 67 percent and drives the rating from BB to B. In conclusion, the $800 million debt has a negative impact on Timken, since it lowers company’s investment-rating scale.

The company’s increase in inventory (illustrated on the statement of cash flows) rose after 1970 and culminated by a drastic increase in 1973. This increase in inventory (especially in 1973) appears to be heavily financed by short-term and long-term borrowing rather than the typical accounts payable. This is a bit unusual and in 1973 (when they acquired the greatest amount of debt equity, their accounts payable decreased. Their sales were not sufficient to offset the large outflows of inventory related costs. Furthermore, Grant’s decentralization was also a cause of their financial woes because rather than corporately controlling credit extension and credit terms, they allowed each store manager to set their own policies (and manipulate them as they desired). This disastrous policy imploded in 1975 when the company had to make a $155.7 million provision for bad debt expense. So not only did the company have substantial debt and bad debt to equity ratios, they were forced to write off about 8.8% of their total sales from 1975.

Since Massey’s stock price has dropped rapidly over the years, issuing new equity is not an attractive option with the low stock prices. Obviously increasing debt is not an option either so the only alternatives for Massey to finance it’s business going forward is to either find savings from it’s Balance sheet and income statement or to sell it’s assets. In below we discuss some opportunities we’ve identified in Massey’s financials.

A/ Hampton Machine Tool Company was unable to repay its loan on time due to several factors. One of such factors is the fact that the stock repurchase, for which the loan was initially requested, was a major cash disbursement of $3 million. In the period between November 1978 and August 1979, stock repurchase represented 58% of total expenditures for that period, while inventory purchases represented 42% of total expenditures.

Lorman Lumber is a publicly traded company with widely held shares. Its Yamica location in rural Oregon is one of the company’s largest. The purpose of the plant is to process and treat wood, which it does through a number of facilities. The Sawmill began producing lumber products in 1947, which it does by peeling, milling, and chipping raw wood. Lorman has a known record of producing good profits, and will often pay out generous performance-based bonuses to executives. Although the Yamica plant is somewhat outdated, it is still considered to be efficient and profitable. Starting in 1968, the company began using new methods to condition and pressure-treat wood products through the

In addition, as we are comparing the profit margin and operating profit margin, we notice that interest expense, from 2006 to 2010, consumed a relative small portion of sales proceeds comparing to 2011. In 2011, the profit margin for HH is -1.46% and the operating profit margin for HH is -0.74%. Since profit margin includes interest expense in the calculation while operating profit margin does not, we can conclude that HH has about the same amount in interest expense as the amount of operating loss before interest. This finally doubles the amount of company’s loss at the end of the cycle. This big amount of interest expense leads us to study HH’s leverage ratios.

A/ Hampton Machine Tool Company was unable to repay its loan on time due to several factors. One of such factors is the fact that the stock repurchase, for which the loan was initially requested, was a major cash disbursement of $3 million. In the period between November 1978 and August 1979, stock repurchase represented 58% of total expenditures for that period, while inventory purchases represented 42% of total expenditures.

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The purpose of this paper is to conduct a financial analysis of Lowe’s Companies, Inc. using financial ratios. The emphasis will be on examining ratios under the aforementioned categories and identifying trends in Lowe’s Companies, Inc. and comparing those findings with the industry averages. This paper will conclude with an assessment regarding the stability and future growth potential of Lowe’s Companies, Inc. in an ever changing economy.

Moreover, the solvency ratios for Jones Electrical indicate a risky firm, hence the floating rate offered by SB&T (prime plus 150 basis points). While the debt to asset ratio has improved considerably

The Balance sheet was generated with the assumption that Butler Lumber would utilize the additional loan from Northrop National. Cash, Accrued Expenses, and Net Property are all based on the most recent year’s percentage of sales. Accounts receivable is derived from average of previous years percentage of sales. In order for Total Assets and Total Liabilities & Net Worth to be in balance Butler Lumber needs additional debt financing of $315,000 as can be seen in Notes Payable. This in turn has an effect on Net Income for 1991, which is added to beginning Net Worth in order to arrive at $435,000.

Summary of Facts. Butler Lumber Company is a Pacific Northwest based lumber distributor that sells plywood, moldings, and sash and door products.  The sole owner of Butler Lumber is Mark Butler, accompanied by one administrative assistant and ten employees who focus on repairs and labor intensive work.  Because of Butler Lumber’s competitive pricing scheme, it has seen rapid growth in the past few years.  Due to the rapid growth and a shortage of cash in 1990, Butler Lumber Company is seeking to take out an additional loan in order for the business to sustain itself and grow in the coming

The firm estimates profits of approximately $65,000 by year 3 with a net profit margin of 6%. The company plans on taking on approximately $130,000 in current debt and raise an additional $50,000 in long term debt to invest in long-term assets by 1998. The company does not anticipate any cash flow problems arising. (Berry, 2008)

Selected capital structure and long-term solvency ratios are shown in Table N. The total debt to equity ratio increases significantly over the past threes from going from 2014 (0.1268), to 2015 (0.0992), and to 2016 (0.1676) but still remains under the industry composite of (0.2068). The source of this increase is accredited to the long-term debt that has dramatically increased throughout these three years; see Exhibit C. Specifically, looking at Exhibit C you can see the trend index of long-term debt (451), is greater than that for the current liabilities (135), total liabilities