Butler Lumber Company Case Study

6. Outline a plan, based on the information provided in the scenario, which the company could use in order to evaluate its financial performance. Consider all the key drivers of performance, such as company profit or loss for both the short term and long term, and the fundamental manner in which each factor influences managerial decisions.

* Does the Sales and Marketing Manager deserve an increase in compensation based on his sales results?

 1. Assess the current financial health and recent financial performance of the company. What strengths and/or weaknesses would you highlight to Adeline Koh? From the ratio of profitability, the company had about 18% on operating margin, 16% on ROE, 8% on ROS and 5% on ROA in both 1998 and 1999. However, there was a downturn trend in profitability ratio in 2000. This could be the result of price competition because of the introduction of DVD manufacturing in the market. The profitability ratios rose again in 2001. It shows that the company had ability to recover its ROE and operating margin. If ROA is sound and debt levels are reasonable, a strong ROE is a solid signal that managers are

What factor do you see driving Deere’s future revenue and earnings growth? What are some of the risks that could adversely impact future growth?

In the next few sections, I will take a closer look at the financial records of the company including the balance sheet and income statement to perform an analysis to see how strong the company is today and if they can keep that strength moving forward. The company’s capital structure, liquidity, and profitability along with other data will be

The company’s debt ratios are 54.5% in 1988, 58.69% in 1989, 62.7% in 1990, and 67.37% in 1991. What this means is that the company is increasing its financial risk by taking on more leverage. The company has been taking an extensive amount of purchasing over the past couple of years, which could be the reason as to why net income has not grown much beyond several thousands of dollars. One could argue that the company is trying to expand its inventory to help accumulate future sales. But another problem is that the company’s

b) Why does a business that has profit $30,000 per year need a bank loan?

Discuss and explain adjusted present value (APV), the flow to equity (FTE) and the weighted average cost of capital (WACC).

The company’s success and performance between 2000 and 2004 seemed to be one of steadiness. The financial information this researcher observed showed the company to have an increase in net sales, total assets, and net income. The company also had increases in the cost of sales and operating costs. This seems to have balanced each side and made the company’s financial ratios stay steady over the years. The shareholders have had a consistent rate of return on their equity as did the common stock.

Butler Lumber Company, a growing profitable business has exhausted its credit limit and the key issues facing it are: 1. Need for additional funds to continue the growth 2. Need to consolidate debt 3. Need to improve cash flexibility.

Analyze the company’s financial performance to determine the link between the company’s strategic goals, strategy, and its financial performance. Detail your findings.

How can the accounting treatments of the newly implemented strategy be best explained to the Controller of Thomas Foods?

I have been hired as the controller of ABC Company, and the CEO has set a target sales goal of 3 million in annual sales over the next three years. The three million dollar sales objective is more than double where the company is at in sales today. This is an aggressive strategy which needs to be examined in terms of its perceived risk factors. There are several factors that impact the success of this strategy, and those risks will be discussed here.

What do the financial forecast and the sources-and-uses-of-funds statement tell us? How about the financial ratios?

Gupta's recommendation to use level annual production. Gupta believes that level production has two main advantages. First, under level production, Guna does not need seasonal hiring and layoff, thereby maintaining a more stable workforce. Secondly, level production can reduce the manufacturing risk, to decrease the profitability of equipment breakdown in peak season, due to a large amount of production request. The cost of equipment breakdown will be huge since Guna's production will be out of stock in the peak season. Based on Gupta's estimation, using level production will reduce the company's direct labor and other direct manufacturing cost from 34% to 29% of its purchases. The impact of Gupta's proposal is illustrated in Exhibit 8, Guna's note payables shows that company cannot clean up its