Longterm financing will require smaller payments at lower interest rates, which will increase clarkson lumber case study finan 6022002 page 1. Keith clarkson, sole owner and president of the clarkson lumber company purpose. Share what you know and love through presentations, infographics, documents and more. Clarkson was an energetic man, 49 years of age, who worked long hours on the job. This increased borrowing will be in the form of a revolving line of credit with an interest rate of 11%. Analysis of financial statements to assess cash needs, the amount of financing needed, and.
The overall impression is one of a conservative, efficient operation. The business is located in a growing suburb of a large city in the pacific northwest. Clarkson lumber company case study solution case study. View notes clarkson analysis spreadsheet from esm 281 at university of california, santa barbara. Its typical products include plywood moldings and sash and door. Because of the nature of clarkson lumber s repair business the case book mentions. Clarkson lumber case woomi choi written assignment objective. The owner of a rapidly growing retail lumber company is considering the financial implications of continued rapid growth. Clarkson lumber is an illustration of a firm that is growing at a rate greater than it can sustain with existing asset requirements and internal financing capacity. The magnitude of the companys future financing requirements must be assessed in the context of the companys access to bank finance andor equity finance.
The company dealt in plywood moldings and sash and door products. Because of the slow growth rate, the inflator for clarkson lumber is set to the inflation rate of four percent, limiting growth rates of variable costs. See fn c in exhibit 1 of the case plug 10365purchases assuming all discounts taken 10%xremaining balance on the term loan 2% of purchases. Clarkson lumber in order to satisfy the demands of expansion and continue growing top line revenue, an increased amount of borrowing is necessary. Part i deals with assessing the financial performance of the firm. The best thing that could happen to clarkson lumber would be to slow down growth and seek equity financing. However, despite rapid growth and increasing sales. Pdf fin 844 clarkson lumber company 1 deng linghui. The excuse of why you can get and acquire this lumber company case solution working. Clarkson lumber company loan application overview borrower.
This is the key problem because even though the company has been in growth. Clarkson lumbers company case analysis part 2 group a. Clarkson lumber case analysis essay 802 words bartleby. It has low operating expenses, a small staff, and strong management. Case study questions clarkson lumber company the clarkson lumber company case is divided into 3 parts. In retrospect we think that perhaps clarkson should reduce its expenses and debt first before leveraging itself further. As exhibit 2 shows, clarion has waited for about 35 o 54 days to pay his suppliers, if mr bayfield mud company case study.
Clarkson lumber case study solution case study analysis. Jingyan zhu fina 3301 professor gary osmond 10152018 clarkson lumber company the problem in the case is that mr. This pdf is competently known cd in the world, of course many people will attempt to own it. Pro forma analysis basic approach is to pick points in time year end, quarter end, month end, determine where cash is expected to be tied up at these points in time, and. Clarkson, the owner of the clarkson lumber company is looking for a new banking relationship where he can get a larger amount loan that do not guarantee the loan personally. Retail distribution of lumber products sales volume is built on price competition quantity discounts involved.
Remember some purchases have been made in the first quarter without the discount. Weatherhead school of management case western reserve university bafi 404. Clarkson was offered a discount if it pays off its payables to its suppliers within ten days. Background clarkson lumber company is owned and operated by the hardworking, 49yearold mr. It provides us details from the case story such as historical perspective on the problem is provided. Clarkson lumber company solutions essay 1118 words. The clarkson lumber company case analysis june 30, 2011 beardsrus leave a comment go to comments note.
Read this business case study and over 89,000 other research documents. It is relatively well managed, but the huge absorption of funds into financing growing inventory and accounts receivable, due to the increase in sales, is putting it into a. Case solution, the owner of a rapidly growing retail business wood examines the financial implications of continued rapid growth. Case study solution, the owner of a rapidly growing retail lumber into account the financial implications of continued rapid growth. Because of the nature of clarkson lumbers repair business the case book mentions. For this section you need to able to understand why clarkson company is so short of funds despite its record of profitable operations and, in this connection, develop the. Clarkson lumber company case harvard business school. Your group is advised to approach the case writeups as if you are a consulting team working for a big consulting firm say mckinsey and that the quality of your report to the client i. Clarkson have to borrow money to support this profitable business. Clarkson said the company has taken few purchase discounts in recent years. Clarkson lumber company case solution essay example paperap.
This is the key problem because even though the company has been in growth during last three years and. Clarkson lumber case analysis free download as excel spreadsheet. Clarkson analysis spreadsheet clarkson lumber company. Statement of the problem at first glance, clarkson lumber appears to be a healthy company. Background clarkson lumber company was founded in 1981 by mr. He was helped by an assistant, who in the words of the investigator of the northrup national bank, has.
Exhibits not included here written april 19, 2010 finance 434 overview clarkson lumber company is a classic example of a privately. The clarkson lumber company case analysis beardsrus. The northrup national bank is in the process of investigating the clarkson lumber company to whether. Financial analysis and forcasting monica fernandes som 101 november 9, 2004 prof. This paragraph explains why we are talking about this today. Clarkson lumber company is owned and operated by the hardworking, 49yearold mr. Clarkson lumber company needs to have stricter policies on the customers they allow to purchase from them on credit.
Results page 8 about tanglewood case 2 answers free essays. Case background clarkson lumber company was founded in 1981 as a partnership between mr. Clarkson seeking a loan that does not require a personal guarantee. Clarkson lumber case study finan 6022002 page 3 the final issue we noticed was the accounts payable 2% discount.
Weatherhead school of management case western reserve. Clarkson lumber companys biggest problem by far is the fact that mr. To support rapid growth in business during recent years and anticipated further substantial increase in sales. Clarkson himself leads a frugal lifestyle with little personal debt.
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