Clarkson Lumber Company Case Study Analysis

Why has Clarkson Lumber borrowed increasing hails despite its professional personfitability? on that point argon a couple of reasons for Mr. Clarkson wanting to increase the amount of borrow that would be takeed to continue with his operations. One of the reasons is that he wants to be agree off Mr. Holtz in ramble for himself to become the radical proprietor of the company. Another reason for the withdraw to borrow cash in hand is that the elucidate income was growing at a slower prescribe than the operate expenses. Between the days of 1993-1995 the net income only rose from 60k, 68k ,77k super C respectively. The operating costs for the 3 years rose from 622k, 717k, 940k gramme respectively. Mr. Clarkson take to take out a loan so he could increase the purchasing causation for goods. This would be constituted by Mr. Clarkson having liquid cash to part for prompt payment, which leave lead to acquiring trade discounts and consequently Mr. Clarkson will have a competitive advantage in boundarys of purchase power. 2. How has Mr. Clarkson met the funding needs in the past?The financing needs of the past have been met by taking a term loan of $399,000 that was fixed by the assets the company had. Mr. Clarkson had maneuver liabilities that were offset printing by the increase in sales. 3. How frequently will Mr.

Clarkson need to finance the expected expansion in salesto $5.5 million in 1996 and to take all trade discounts? base on the pro forma balance sheet and the pro forma income statement, Mr. Clarkson would need $750,000 loan. This would be justify in terms of using the next formulas, which is derived from the 1996 Pro Forma proportio n Sheet (figures are in thousands): do Asset! s ? Total Liabilities ? cabbage Worth 2179 - 533 ? 1395 = 251Following the 251 that would be... If you want to get a full essay, order it on our website: OrderEssay.net

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