Financial Analysis : Case 13. 6 Butler Lumber Company

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Case 13.6 Butler Lumber Company Christine Milot Finance and Accounting for Decision Making Dr. Jack McCaffery Herzing University September 10, 2017 Abstract Mark Butler, the sole owner of Butler Lumber Company is interested in expanding his business and would like to take out a higher loan to reach his goals. The objective of this paper is to analyze Butler Lumber Companies financial statements and ratios, to determine if taking out a new loan is the best possible decision at this time. “Financial ratios analysis is used to find an answer of the following main questions: is activity profitable, has the company enough money to pay its obligations, how higher is wages level of its employees, company use its assets efficiently, has company a gearing problem” (Monea, M. 2009). A few specific facts that we need to take note of include; increase in debt to pay back liabilities over time, substantial extended trade debt, high accounts receivables due to high credit to customers, general economic down turn could be a risk, competitive advantage is based on price, and operating expenses are as low as possible (Anthony, Hawkins, & Merchant, 2011). The recommendation and findings show that the Mr. Butler should first consider increasing sales and reducing his accounts payable so he has more cash and no requirement to take out a higher loan.Case 13.6 Butler Lumber Company Butler Lumber Company is growing and is expecting increased sales in the spring of 2011. (Anthony, Hawkins, &

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