I. Statement of Financial Problem Butler Lumber Company, a growing, profitable business has exhausted it’s credit limit with its current bank and needs additional capital to: * Continue to fund growth * Consolidate debt * Improve cash flexibility In this case study, I will examine the following problem: During the years of 1988-1990, why has Butler Lumber increased sales volume but experienced a decrease in cash flow? This problem is historical, and I will base my analysis from information
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Working Capital Management and Short-Term Finance Butler Lumber Assume you are a credit analyst working in the credit department of the Northrup National Bank and George Dodge asked you to analyze whether the bank should extend the requested $465,000 loan to Butler Lumber. Using the 5Cs of credit analysis format, prepare a report for Mr. Dodge. Here is some guidance: CAPACITY/CASH FLOW: 1. How has Mr. Butler met the financing needs of the company during the period 1988 through 1990? (Analyze by
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Case Analysis: Butler Lumber Company (2011-05-03 06:06:15) 转载▼ 标签：mbacorporatefinancecasestudybutlerlumber财经 | 分类： CorporateFinanceCaseStudy | HARVARD BUSINESS SCHOOL 9-292-013 REV: JANUARY 4, 2002 Butler Lumber Company To examine Butler’s current financial situation and to answer the question of how well Butler is doing are not an easy task. There are many things to look into. Let us start with net working capital. Net working capital= current assets- current liabilities
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Statement of firm’s position Butler Lumber Company is looking for more cash due to a fast-paced lumber market and a shortage of funding. Their regular bank, Suburban National Bank, is not willing to expand their exiting loan to an amount greater than $250,000 without securing the loan with real property. Another loan is being offered by a second bank, Northrup National Bank, for $465,000, with the understanding that the previous loan would be rolled into the second. The interest on the new loan
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Butler Lumber Company To examine Butler’s current financial situation and to answer the question of how well Butler is doing are not an easy task. There are many things to look into. Let us start with net working capital. Net working capital= current assets- current liabilities 1988 1989 1990 1991 current assets 468 596 776 932 current liabilities 260 375 535 690 net working capital 208 221 241 242 In thousands of dollars For 1991, only first quarter’s data is provided, so
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HARVARD BUSINESS SCHOOL 9-292-013 REV: JANUARY 4, 2002 Butler Lumber Company To examine Butler’s current financial situation and to answer the question of how well Butler is doing are not an easy task. There are many things to look into. Let us start with net working capital. Net working capital= current assets- current liabilities | 1988 | 1989 | 1990 | 1991 | current assets | 468 | 596 | 776 | 932 | current liabilities | 260 | 375 | 535 | 690 | net working capital | 208
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National Bank, for $465,000, with the understanding that the previous loan would be rolled into the second. The interest on the new loan would be prime + 2%. The co-founder, Mark Butler, owes a major note to the other original partner, who Mark bought out. He has a mortgage on his 12-year-old house and no other significant investments. Mark’s personal references indicate that he is hard-working and watches his business very closely. Mark’s current outstanding debts are as follows: Bank note
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3. In order to choose between trade credit and a bank loan as a source of funds, Mr. Butler needs to determine if he can pay the supplier offering trade credit within the agreed upon time frame. If he is unable to make the payment to his suppliers on time, then he should choose bank loans. This decision should be based upon Mr. Butler’s ability to cover the full amount he owns within the 30 day period given by his supplier, and if possible to pay within the 10 day period in order to receive the 2%
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BUTLER LUMBER CASE REPORT The Butler Lumber company is facing cash difficulties due to the buyout of Henry Stark’s share and because it is operating a high growth rate. Thus, it is imperative to analyze the various options available to Mark Butler in order to meet the cash needs of the Butler Lumber Company. In order to support the reasoning for our recommendation, we constructed a ratio analysis (Appendix I; Exhibit 1). Even though the firm has realized increasing sales and decreased its operating
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George Dodge Date: 1th June 1991 Subject: Business Analysis of Butler Lumber Business and Loan Recommendation We would like to make concise summaries of a prospective client, Butler Lumber Company led by Mr. Mark Butler- a sole owner and president. Butler Lumber Company was founded in 1981 as a partnership by Mark Butler and Henry Stark, located in growing suburb area of a large city in the Pacific Northwest. Company typical products include plywood, molding, and sash and door. Generally
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