butler - The maximum loan that the Butler Lumber Company...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
The maximum loan that the Butler Lumber Company (BLC) could obtain from Suburban National 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 Suburban National if they were to have this LOC extended to them. As Mr. Butlers 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 an experienced salesman that is working for a base salary plus commission, they can grow the revenues even more. By having this person work on commission, this will eat into the profit margin for the materials he is selling. But the net impact to the BLC will be positive. I would advise Mr. Butler to select the LOC for up to $465,000 because he can take out as little as he needs. He does not need all $465,000 this
Background image of page 1

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

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 01/28/2011 for the course FIN 305 taught by Professor Michaelson during the Spring '10 term at University of Central Florida.

Page1 / 2

butler - The maximum loan that the Butler Lumber Company...

This preview shows document pages 1 - 2. Sign up to view the full document.

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