butlerlumber

butlerlumber - Kevin Raesly Team Number 3 Butler Lumber...

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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 supporting a profitable company that will be able to repay the loan when it is due . The return on equity ratio has stayed consistently around 11-12%, which is considered good for companies because they have little risk . If this percentage was high, then there is a lot of risk involved in giving a loan, but as one can see, their percentage has stayed consistently low over the past few years . Another reason why Northrop should extend the loan is because of the reports on Mr . Butler himself . Everyone who was asked to talk about him had given him very high regards . It was quoted that “he possesses sound judgment and a willingness to work harder than anyone I have ever known” and that the
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butlerlumber - Kevin Raesly Team Number 3 Butler Lumber...

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