Butler Lumber

Butler Lumber - ButlerLumber ClicktoeditMastersubtitlestyle...

Info iconThis preview shows pages 1–7. Sign up to view the full content.

View Full Document Right Arrow Icon
Click to edit Master subtitle style  10/21/10 Butler Lumber Case Analysis Jon Sadow & Mike Samuels
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
 10/21/10 Company Background ± Founded in 1981 as a partnership between Mark Butler  ± Butler used debt financing to buyout Stark’s share in 1989 ± Located in a growing suburb of a large city in the  Pacific Northwest, ± Operations are limited to retail distribution of lumber  products ± Products include plywood, moldings, and sash and door 
Background image of page 2
 10/21/10 Major Challenges ± 55% of sales come from April-September ± Seasonal cash needs ± Offer quantity discounts and credit terms of net 30 days  on open accounts ± Not currently taking advantage of 2/10 discounts ± Effective interest rate of not taking advantage of these  discounts is significantly more than than the 10-12% of  available debt
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
 10/21/10 Historical Financial Performance 1988 1989 1990 Q1 1991 Sales $1,697 $2,013 $2,694 $718 Growth Rate 18.62% 33.83% Cost of Goods Sold (as % of Sales) 72.01% 71.39% 72.38% 72.70% Gross Profit $475 $576 $744 $196 Net Income $31 $34 $44 $9
Background image of page 4
 10/21/10 Historic Balance Sheet 1988 1989 1990 Q1 1991 Cash $58 $49 $41 $31 Accounts receivable, net $171 $222 $317 $345 Inventory $239 $325 $418 $556 Total Current assets $468 $596 $776 $932 Property, net $126 $140 $157 $162 Total assets $594 $736 $933 $1,094 Notes payable, bank $0 $146 $233 $247 Notes payable, Mr. Stark $105 $0 $0 $0 Notes payable, trade $0 $0 $0 $157 Accounts payable $124 $192 $256 $243 Accrued expenses $24 $30 $39 $36 Long-term debt, current portion $7 $7 $7 $7 Total Current liabilities $260 $375 $535 $690 Long-term debt $64 $57 $50 $47 Total liabilities $324 $432 $585 $737 Net worth $270 $304 $348 $357 Total liabilities and Net Worth $594 $736 $933 $1,094
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
 10/21/10 Current Debt ± Long term loan taken on to purchase Mr. Stark’s share  of the business ± $70K over 10 years, $7K each year at a rate of 11%
Background image of page 6
Image of page 7
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 10/20/2010 for the course FINA 124 taught by Professor Ismaildalla during the Spring '10 term at GWU.

Page1 / 19

Butler Lumber - ButlerLumber ClicktoeditMastersubtitlestyle...

This preview shows document pages 1 - 7. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online