Essay on Clarkson Lumber questions

In this report, we study the case of Butler Lumber Company and analyze the financing problem it was facing. First, we give a brief review of the background information of the company. Then we diagnose the business by examining its financial statistics and discover that company was seriously lacking of cash due to the poor operation of working capital and cost control. Free Cash flow is the key concern in our estimation. “Break-Even Analysis” stressing on the balance of free cash flow is applied in the estimation of the loan amount needed for

1. Productivity of the crew would be below standard. I believe for the productivity to be below standard because they were sent to this crew because of their lack of work. Just because they have been assigned to another crew, does not mean that they will begin to work well right away. When compared to the Equity Theory, I believe there to be positive inequity for the three men assigned to the new group. For being assigned to the group due to lack of work, it is unfair to have a higher pay grade than those who have been in the company for a longer period of time and who are doing their job correctly. This may cause issues with subprofessionals being motivated to work to their full

Strictly speaking, at present the Dawson Lumber Company is being financed by a bank loan. The company’s equity structure constitutes common stock capital amounting to $4.3 million and the accumulated earnings. Presently, the company’s financing needs are met through two types of bank loans which include a working capital loan obtained specifically to meet the working capital requirements and the present long term loan amounting to 4.2 million. Both the loans are obtained from National bank of Canada (NBC). The NBC took accounts receivable and inventory as collateral and as a condition of the loan against the charge on the borrowed amount for which Dawson undertook to provide quarterly financial statements and monthly reports of inventory, sales and receivables.

Briefly explain the problem you have chosen. How does it arise, and what issues does it present?

Analyze and evaluate each case independently by providing the following (about two paragraphs per case):

The Lawsons’ efficiency ratios are another section the bank will find troubling. The company’s age of payables has nearly tripled over the last four years. This can be detrimental to the company’s image and reliability including their reliability toward the bank if granted the loan. Along with increasing age of payables is increasing age of receivables and age of inventory. Indicating that Mr. Mackay is taking longer to collect his receivables and that he has purchased too much inventory. Too much inventory results can result in further issues

Based on the scenario in the first part of this discussion, suggest at least one (1) strategy that the client should use in defense of a criminal case pursued. Provide a rationale for your response.

Overall, Clarkson Lumber Company has now a total loan of $ 763,000, i.e. $ 399,000 from Suburban and $ 364,000 from Northrup National Bank. Interest Payment for the previous year would add up to the coming years and the Company has to have enough cash to service the loan. It has to reduce its Accounts receivables by a substantial amount because this is one of the major reasons why the company is facing shortage of cash and has difficulties in paying its short term obligations.

In a narrative format discuss the key facts and critical issues presented in the case.

From 1993 through 1995, Clarkson Lumber Company experienced significant sales growth – 19.0% from 1993 to 1994 and 30.0% between 1994 and 1995. Profitability also increased, but not nearly at the same pace as sales revenue. Net income rose from $60,000 in 1993 to $68,000 in 1994 (a 13.3% increase), to $77,000 in 1995 (13.2% increase). This increase in sales and profitability demanded growth in working capital and fixed assets to finance the growth, creating a need for cash that outpaced free cash flow into the firm. Furthermore, Mr. Clarkson’s buyout payments to Mr. Holtz in 1995 and 1996 only added to the liquidity predicament. Thus, Clarkson was compelled to draw upon his line of credit with Suburban National Bank and begin relying heavily on trade credit, quickly maxing out his bank credit line by the end of 1995.

Jackson Automotive has a cash balance as of May 31, 2013 of $4,994,000 with a loan due at the end of June 2013 for $5 million (See Appendix D for Balance Sheets). The cash short fall came about for several reasons. First, Mr. Edwards liquidated the company’s cash position of $5 million and took out a short-term loan for $5 million to repurchase stock. Second,

This case study is about B.R.Richardson Timber Products Corporation a lamination plant located in Papoose, Oregon. Part of the management team determined that there was a need for change in the organization and decided to reach out to Jack Lawler a management trainer and consultant for help. The issues which needed to be addressed were the low morale in the plant, the authoritative plant manager, and the fact that there was a resent fatality in the plant. Bowman was in charge of industrial relations at the plant and felt that a motivation course was needed.

company had experienced a shortage of cash and had found it necessary to increase its borrowing

Options: The Butler Lumber Company (BLC) could obtain from Suburban National Bank maximum loan of $250,000 in which his property would be used to secure the loan.  Northrop National Bank is considering BLC a line of credit (LOC) of up to $465,000.  BLC would have to sever ties with Suburban National if they were to have this LOC extended to them.

* Define the problem: differentiate facts from opinions, specify underlying causes, tap everyone involved for information, state the problem explicitly, identify what standard is violated, determine whose problem it is, avoid stating the problem as a disguised solution.