Executive Summary Clarkson Lumber is a small but rapidly growing lumber company in the Pacific Northwest. Keith Clarkson--sole owner and president--anticipates further sales growth but his business may not be able to keep up with future demand because of a shortage of cash, despite good profits. Currently the company has a line of credit with Suburban National Bank, but the bank would not offer any one customer any more than a $400,000 loan, a limit which Clarkson is bumping up against at $399
Words: 1870 - Pages: 8
Clarkson Lumber Background Despite its past record of profits, Clarkson Lumber has borrowed increasing amounts to satisfy the ambitious goals of its owner: Keith Clarkson. As shown in Exhibit 3, Clarkson is attempting to grow faster than its sustainable growth rate, and therefore must rely on external financing. This reliance is exacerbated by Mr. Clarkson’s simultaneous buyout of his former partner, Mr. Holtz, which has consumed cash that otherwise could have been used to meet Clarkson’s growing
Words: 538 - Pages: 3
Clarkson Lumber Company Case : Assignment, Due October 4 1. In your group, assign a Team Administrator, a Notekeeper, and a Number Cruncher(s). These do not need to be independent roles (the Team Spokesperson may be the Number Cruncher, etc.). The other members of the group will contribute their thoughts and ensure that their spokesperson has all the relevant facts to speak for their group. a. The Team Administrator keeps the group on track to ensure that the discussion is on topic
Words: 390 - Pages: 2
The key problem for Mr. Clarkson is should they give up the current limited trade creidt in order to get a bigger loan from a much larger bank Northrup National Bank. 2. Why has Clarkson Lumber borrowed increasing amounts despite its consistent profitability? Nonetheless, Clarkson Lumber had a consistent profitability in the past years. The several reasons still make Mr. Clarkson in cash shortage trouble. First, in 1994, Mr. Clarkson bought out Mr. Holtz’s interest for $200,000
Words: 1140 - Pages: 5
COMM 371, Lecture 6 COMM 371, Lecture 6 Lecture 6: Financing Growth – The Clarkson Lumber Case Outline for Today (Clarkson Lumber) • Case objectives • Understand what drives the need for cash: Clarkson needs cash, but has a good record of profitability • Evaluate Clarkson’s loan requirements and ability to repay • Link the short-term financial plan to evaluating the firm’s long-term goals • Practice basic skills in financial analysis • Review facts of case • Construct statement of cash flows
Words: 2122 - Pages: 9
Clarkson Lumber Company Case Assignment : Due Oct 3 1. In your group, assign a Team Administrator, a Notekeeper, and a Number Cruncher(s). These do not need to be independent roles (the Team Spokesperson may be the Number Cruncher, etc.). The other members of the group will contribute their thoughts and ensure that their spokesperson has all the relevant facts to speak for their group. a. The Team Administrator keeps the group on track to ensure that the discussion is on topic
Words: 417 - Pages: 2
Statement of the Problem At first glance, Clarkson Lumber appears to be a healthy company. However, despite rapid growth and increasing sales Clarkson Lumber finds itself searching for additional funding to compensate for a shortage in cash to fund its expanding business. Clarkson Lumber is in this situation for a number of reasons. The company's inability to receive payments from customers in a timely manner created a severe impact in the company's cash flows. The age of account receivables
Words: 1202 - Pages: 5
MEMO RE CLARKSON LUMBER TO: President, Northrup National Bank FROM: George Dodge Loans Officer, Northrup National Bank Clarkson Lumber Company is owned and operated by the hardworking, 49-year-old Mr. Clarkson.With relatively low operating expenses, operated by a small number of staff and a strong management. Clarkson Lumber is a company experiencing rapid growth with an anticipation of a further increase in sales. However the company has constant cash flow problems. The financial ratios
Words: 877 - Pages: 4
Thursday, January 19: Clarkson Lumber Company Reading: Note on Financial Analysis a. How is the company's financial performance? (Examine appropriate financial ratios.) b. Why has Clarkson Lumber borrowed increasing amounts despite its consistent profitability? c. How has Mr. Clarkson met the financing needs of the company during the period 1993 through 1995? Has the financial strength of Clarkson Lumber improved or deteriorated?
Words: 2003 - Pages: 9
Overview Clarkson Lumber Company is a classic example of a privately held company that has experienced a rapid growth in sales and has reached a point where it is facing a shortage of cash to sustain the expected growth in sales in the following years. The owner, Keith Clarkson, bought out his partner’s interest in the company in 1994 for $200,000. His partner, Henry Holtz, took a note for the $200,000 with an interest rate of 11% and was repayable in the semi-annual installments of $50,000 beginning
Words: 825 - Pages: 4
