Documents about Butler Lumber

  • 2 Pages

    butlerlumber

    Cornell, AEM 2220

    Excerpt: ... Kevin Raesly Team Number 3 Butler Lumber Company March 28, 2008 Problem The problem, in this situation, is dealing with what Mr. Dodge and Northrop National Bank should with the potential loan they would be giving to Butler Lumber Company. The possible alternatives are to just extend the loan under the circumstances discussed, extend the loan but change the conditions, or to refuse the loan all together. Alternative One The first alternative for Northrop National Bank to consider is to extend the loan. Mr. Dodge is willing to give a loan up to $465,000, which Mr. Butler decided was much more than his company needed. Mr. Butler liked the idea of having this extra money available, but knew that he would not need that much for his future. The reason that Northrop National Bank should extend the loan is simple: Butler Lumber Company has had rapid growth over from 1988-1991 and their projected future sales are expected to keep rising as well. This would give confidence to the bank in knowing that they are supporti ...

  • 2 Pages

    Case #1 (Butler Lumber)

    E. Michigan, FIN 450

    Excerpt: ... FIN 450 Butler Lumber Case # 1 Submitted by Submitted to: Prof. Thomas J. Paup Date: September 12, 2007 ...

  • 3 Pages

    Butler Lumber Case Various Internet Suggestions

    Cornell, AEM 2220

    Excerpt: ... Butler Lumber Case Study Solution Case Study Objective: As Mr. Butler's financial advisor, would you give urge him to go ahead with, or reconsider, his anticipated expansion and his plans for additional debt financing? As the banker, would you approve Mr. Butler's loan request, and, if so, what conditions would you put on the loan? The maximum loan that the Butler Lumber Company (BLC) could obtain from Suburban Nation was $250,000 in which his property would be used to secure the loan. Northrop National Bank offered BLC a line of credit of up to $465,000. BLC would have to sever ties with Surburban National if they were to have this LOC extended to them. As Mr. Butler's financial advisor, I would advise him to take the loan in an attempt to grow the business. One alarming fact about his business is the lack of a sales staff, yet the revenue has been able to grow at a fast pace; 18% in 1989, 34% in 1990, 19% in 1991. By adding another experienced salesman that is working for a base salary plus commission, t ...

  • 3 Pages

    Butler Lumber Case Various Internet Suggestion

    Cornell, AEM 2220

    Excerpt: ... Butler Lumber Case Study Solution Case Study Objective: As Mr. Butler's financial advisor, would you give urge him to go ahead with, or reconsider, his anticipated expansion and his plans for additional debt financing? As the banker, would you approve Mr. Butler's loan request, and, if so, what conditions would you put on the loan? The maximum loan that the Butler Lumber Company (BLC) could obtain from Suburban Nation was $250,000 in which his property would be used to secure the loan. Northrop National Bank offered BLC a line of credit of up to $465,000. BLC would have to sever ties with Surburban National if they were to have this LOC extended to them. As Mr. Butler's financial advisor, I would advise him to take the loan in an attempt to grow the business. One alarming fact about his business is the lack of a sales staff, yet the revenue has been able to grow at a fast pace; 18% in 1989, 34% in 1990, 19% in 1991. By adding another experienced salesman that is working for a base salary plus commission, t ...

  • 7 Pages

    Financial Statements

    Cornell, AEM 2220

    Excerpt: ... Operating Statement BUTLER LUMBER COMPANY 1988 Net Sales Cost of Goods Sold Beginning Inventory Purchases 1697 183 1278 1461 239 1222 475 425 13 37 6 31 1989 2013 239 1524 1763 326 1437 576 515 20 41 7 34 1990 2694 326 2042 2368 418 1950 744 658 33 53 9 44 Ending Inventory Total Cost of Goods Sold Gross Profit Operating Expense Interest Expense Net Income Before Taxes Provision for Income Taxes Net Income Balance Sheets BUTLER LUMBER COMPANY 1998 Cash Account Receivable, net Inventory Current Assets Property, net Total Assets Notes Payable, bank Notes Payable, Mr. Stark Notes Payable, trade Accounts Payable Accrued Expense Long Term Debt, current portion Current Liabilities Long Term Debt Total Liabilities Net Worth Total Liabilities & Net Worth Financial Ratios BUTLER LUMBER COMPANY 58 171 239 468 126 594 0 105 0 124 24 7 260 64 324 270 594 1989 48 222 326 596 140 736 146 0 0 192 30 7 375 57 432 304 736 1990 41 317 418 776 157 933 233 0 0 256 39 7 535 50 585 348 933 1998 Liquidity & Indetedne ...

  • 2 Pages

    Financial Analysis Pro Forma Butler Analysis

    Cornell, AEM 2220

    Excerpt: ... APPENDIX B: Sales Projection; Pro Forma 1991 Operating Statement: Pro Forma 1991 BUTLER LUMBER COMPANY 1991 Net Sales Cost of Goods Sold Beginning Inventory Purchases 3600 418 2718 3136 544 2592 1008 900 40 68 12 56 Balance Sheets: Pro Forma 1991 BUTLER LUMBER COMPANY 1991 Cash Account Receivable, net Inventory Current Assets Property, net Total Assets Notes Payable, bank Notes Payable, Mr. Stark Notes Payable, trade Accounts Payable Accrued Expense Long Term Debt, current portion Current Liabilities Long Term Debt Total Liabilities Net Worth Total Liabilities & Net Worth 40 454 548 1042 177 1219 247 0 157 343 51 7 805 43 848 371 1219 Ending Inventory Total Cost of Goods Sold Gross Profit Operating Expense Interest Expense Net Income Before Taxes Provision for Income Taxes Net Income Financial Ratios: Pro Forma 1991 BUTLER LUMBER COMPANY 1991 Liquidity & Indetedness Current Ratio Liquidity Ratio or Acid Test Debt Ratio Debt to Equity Ratio 1.29 0.614 69.57% 2.3 ASSUMPTIONS Purchases have averag ...

  • 9 Pages

    ButlerAnswer

    Arkansas Little Rock, FIN 7311

    Excerpt: ... Butler Lumber Company BUTLER LUMBER COMPANY EXHIBIT 1 Operating Expenses for Years Ending December 31, 19881990, and for First Quarter 1991 (thousands of dollars) 1988 Net sales Cost of goods sold: Beginning inventory Purchases $1,697 1989 $2,013 $239 $1,524 $1,763 $326 $1,437 $576 $515 $20 $41 $7 $34 1990 $2,694 $326 $2,042 $2,368 $418 $1,950 $744 $658 $33 $53 $9 $44 1st Qtr 1991 $718 $418 $660 $1,078 $556 $522 $196 $175 $10 $11 $2 $9 $183 $1,278 $1,461 Ending inventory $239 Total cost of goods sold $1,222 Gross Profit $475 Operating expenses $425 Interest expense $13 Net income before income taxes $37 Provision for income taxes $6 Net income $31 a. In the first quarter of 1990 sales were $698,000 and net income was $7,000. b. Operating expenses include a cash salary for Mr. Butler of $75,000 in 1988, $85,000 in 1989, $95,000 in 1990, and $22,000 in the first quarter of 1991. Mr. Butler also received ...

  • 3 Pages

    Only Excel

    Cornell, AEM 2220

    Excerpt: ... Exibit 1 Projected Income Statement for Butler Lumber Co. for period ending December 31, 1991. (000's) Net Sales CoGS Beginning inventory Purchases Ending inventory Total cost of goods sold Gross profit Operating expense Interest expense EBIT Provision for income taxes Net Income 3600 418 2718 544 2592 1008 900 40 68 12 56 <- Assume 75.5% of sales based on prior 3 years <- Calculated based on other assumptions as noted <- Assuming previous 3-year average of 72% <- Extrapolated from 1st qtr <- 15% on 50k, then 25% Exibit 2 Projected Balance Sheet for Butler Lumber Co. Ending December 31, 1991 (000's) Assets Cash A/R net Inv Current assets Property, net Total Assets 40 454 548 1042 177 1219 Assumptions <- Based on trend, to fill in after cash budget <- Based on trend, previous increase was .7%, assume .7% for 1991 <- Based on average inv turnover of 4.73 for last 3 years Liabilities Notes payable, bank N/P, Mr. Stark N/P, trade A/P Accrued expenses Long-term debt, current portion total ...

  • 4 Pages

    Butler Lumber Company Sample 1

    Cornell, AEM 2220

    Excerpt: ... MBUS 624 Case 1 Butler Lumber Company Harley McAllister Craig Mastenbaum Taresa Downey Matt Ewers February 13, 2006 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 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 for $247,000 Outstanding debt from trade ...

  • 5 Pages

    APPENDIX A Financial Analysis

    Cornell, AEM 2220

    Excerpt: ... APPENDIX A: Financial Analysis Financial Ratios BUTLER LUMBER COMPANY 1998 Liquidity & Indetedness Current Ratio Liquidity Ratio or Acid Test Debt Ratio Debt to Equity Ratio 1.80 0.881 54.55% 1.2 1989 1.59 0.720 58.70% 1.4 1990 1.45 0.669 62.70% 1.7 First Quarter 1991 1.35 0.545 67.37% 2.1 Ratios Appraising Funds Management - Turnover Relationship Average Daily Sales 4.71 Accounts Receivable 36.28 Inventory Turnover 5.11 Profitability Ratios Return on Assets Profit Margin Gross Margin Asset Turnover Profit Percentage on Assets 5.59 39.70 4.41 7.48 42.36 4.67 7.98 43.25 5.22% 1.83% 27.99% 2.857 5.22% 4.62% 1.69% 28.61% 2.735 4.62% 4.72% 1.63% 27.62% 2.887 4.72% 27.30% Current Ratio: This ratio is declining showing that liabilities is increasing or assets are decreasing. In BLC's case, both are growing but liabilities are going proportionately greater than assets. Acid Ratio Test: This ratio is below one and decreasing every year. This is perhaps the most important ratio in the ana ...

  • 5 Pages

    Presentation finance

    Arkansas Little Rock, FIN 7311

    Excerpt: ... Case presentation 2: Butler Lumber Company Team 6 Question 1: 1. Money from earnings does not provide enough capital for expected growth. 2. Cash reserves decreased from 1988-1990 3. From 1988-1990 Butler averaged 44.6 days to pay vendors and forfeited 2% discount 4. Day sales outstanding increased to 42.9 and decreased cash available 5. Money was tied up in inventory. Day's sales in inventory averaged 77.5. 6. Increased accrued expenses and capital expenditures had to be made to keep up with growth 7. Interest in Henry Stark was bought out in 1988 with long term debt Question 2 : LOAN REQUIREMENT Company Estimate- $465,000 Group Estimate- $358,000 Question 3: Suggestions DSI : Decrease Account payable: Utilized discount Account receivable: Bring collection time down Banker: Refinance long-term debt Assets collateralize note Restrict distributions and salary Approval of capital expenditures ...

  • 3 Pages

    222.5

    Cornell, AEM 2220

    Excerpt: ... Problem: George Dodge must decide if Northrop National Bank should extend a loan to Butler Lumber and if so, must decide under what conditions the loan should be extended. Alternative One: Extend the Loan- Extending the loan would have many positivesfor Mr. Dodge. A 465,000 dollar loan could make the bank a lot of money. By not extending the loan with modifications, Dodge ensures that Butler lumber will continue to pursue business with Northrop National Bank. Additionally, Butler always was diligent in paying back their past loan. All of Butlers suppliers often give Butler leeway in paying, and Butler always pays their debt. Butler is a well-respected company. Additionally, Butlers sales and profits seem to be going up. There has been an average of a 20 percent increase in net income the past two years, and therewas a 28 percent increase in 1991s first quarter net income to that of 1990s first quarter. Increase in sales to 3.6 million seems adequate, and if lumber prices rise they could make even ...

  • 3 Pages

    Case Study

    Cornell, AEM 2220

    Excerpt: ... Case Study: Butler Lumber Company Butler Lumber Company (BLC) has experienced prodigious growth in the short life of its company. However, a shortage of funds has forced BLC to use debt extensively and now this lifeline is on the verge of exhaustion. BLC must formulate a plan that emphasizes debt reduction and increases their sources of cash to continue their growth. Alternative 1: Extend Loan to BLC George Dodge should encourage BLC to acquire the $465,000 from Northrop National Bank (NNB). BLC will continue to be a profitable company without the additional funding from NNB. This is evidence that BLC is a viable firm and Dodge can collect on the compound interest payments that would have otherwise been paid to Suburban National Bank (SNB). The reallocation of BLC's debt can reduce compound interest paid and creditworthiness for BLC and simultaneously increase interest profits for NNB. BLC should transfer the debt of the loan used to pay Henry Stark to their new credit line. With an 11% interest rate, 7 years ...

  • 1 Pages

    Butler Lumber Excel Sheet

    Cornell, AEM 2220

    Excerpt: ... Butler Lumber Co. 1988 1989 1990 1st Quart. 1991 Current Ratio= Current Assets/Current Liabilities Current Asset 468 596 776 932 Current Liabilities 260 375 535 690 Current Ratio 1.8 1.6 1.5 1.4 Acid Test Ratio= Current Assets-Inventories/Current Liabilities Current Assets 468 596 776 932 Inventories 239 326 418 556 Current Liabilities 260 375 535 690 Acid Test Ratio 0.88 0.72 0.67 0.54 Account Receivable Ratio= Sales/Acct. Receivable Account Receivables 171 222 317 345 Sales 1697 2013 2694 718 Account Receivable Ratio 9.9 9.1 8.5 2.1 Days to Receive Cash=365/A.R. Turnover 37 Days 40 Days 43 Days 43 Days Inventory Turnover= CGS/Ave. Inventory CGS 1222 1437 1950 522 Average Inventory 211 283 372 487 Inventory Turnover 5.8 Times 5.1 Times 5.2 Times 1.1 Times Average Sale Period= 365/Inven. Turnover 63 Days 72 Days 70 Days 83 Days Accounts Payable Ratio= Accounts payable/CGS Accounts Payable 124 192 256 CGS 1222 1437 1950 Accounts Payable Ratio 0.1 0.13 0.13 Sill 243 522 0.5 ...

  • 2 Pages

    Financial Analysis Butler Lumber

    Cornell, AEM 2220

    Excerpt: ... APPENDIX A: Financial Analysis Financial Ratios BUTLER LUMBER COMPANY 1998 Liquidity & Indetedness Current Ratio Liquidity Ratio or Acid Test Debt Ratio Debt to Equity Ratio 1.80 0.881 54.55% 1.2 1989 1.59 0.720 58.70% 1.4 1990 1.45 0.669 62.70% 1.7 First Quarter 1991 1.35 0.545 67.37% 2.1 Ratios Appraising Funds Management - Turnover Relationship Average Daily Sales 4.71 Accounts Receivable 36.28 Inventory Turnover 5.11 Profitability Ratios Return on Assets Profit Margin Gross Margin Asset Turnover Profit Percentage on Assets 5.59 39.70 4.41 7.48 42.36 4.67 7.98 43.25 5.22% 1.83% 27.99% 2.857 5.22% 4.62% 1.69% 28.61% 2.735 4.62% 4.72% 1.63% 27.62% 2.887 4.72% 27.30% Current Ratio: This ratio is declining showing that liabilities is increasing or assets are decreasing. In BLC's case, both are growing but liabilities are going proportionately greater than assets. Acid Ratio Test: This ratio is below one and decreasing every year. This is perhaps the most important ratio in the ana ...

  • 1 Pages

    readme

    TCU, BJONES 20263

    Excerpt: ... pp-lecture The PowerPoint slides in this folder are designed to be used to support lectures on the textbook contents. They include the text figures plus bulleted lists and other slides that reflect the narrative. Some instructors choose to post the ...