Case—Butler Lumber Company

1.Why does the company need funds? original, pantryman pound Company in the spring of 1991 anticipated a yet substantial increase in sales. It means there be more working capital associated with the companys increase sales volume. Second, although they have good profits, the company had experienced a shortage of cash. The companys current borrowing from Suburan field of study money box almost reaches the maximum loan that SN Bank would make. Meanwhile, the SN Bank now asks pantryman Lumber to promise the loan with its real property. Third, Mr. Butler had recently bought out some other partners interest for $105,000 and incorporated the business, and he brocaded a loan of $70,000 negotiated in late 1988. All these reasons pushed Mr. Butler to negotiate a larger and unsecured loan. 2.Do you add with the estimate of companys loan requirement? How a great deal the company will have to borrow, assuming sales of $3.6 one million million million in 1991? My calculations of the companys Operating Statements and the Balance Sheets ar accord with the estimate they made in the article. According to my numbers, Butler Lumber Company will need to borrow almost $297,000 for the second quarter of 1991.

Since there are 55% of score sales were made in the six months from April through September, the First Quarter is probably the worst quarter in the unanimous division, which only contributes 20% of the sale. But the company did ok with their prototypal quarter so far, it indicates that the company will definitely do better for the next three quarters in year 1991. *Please see details from the Operating Statements and Balance Sheets enclosed. 3.Would you nominate Mr. Butler to expand his business and borrow or consider his expansion plans? --Current Ratio=Current assets/Current Liability=1199/767=1.56 --Debt truth ratio= total debt/total equity=50/432=11.6% --Receivables swage=Sales/ acc receivable=3600/432=8.33 --Profit Margin=NI/Sales=46/3600=1.28% According to these ratios, the company now... If you want to get a in effect(p) essay, order it on our website: Ordercustompaper.com

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