OPPapers.com Essay Index >> Business >> Clarkson Lumber Company
We have many free term papers and essays on Clarkson Lumber Company. We also have a wide variety of research papers and book reports available to you for free. You can browse our collection of term papers or use our search engine.
Clarkson Lumber Company. ... Clarkson Lumber Company needs to have stricter policies
on the customers they allow to purchase from them on credit. ...
Clarkson Lumber Company. Mr. George Dodge, Clarkson Lumber Company is doing
well but there is the issue of whether or not there is ...
Clarkson Lumber Company. Clarkson Lumber Company Clarkson Lumber is an
illustration of a firm that is growing at a rate greater than ...
Clarkson Lumber Company. Mr. George Dodge, Clarkson Lumber Company is doing
well but there is the issue of whether or not there is ...
Clarkson Lumber Company. Clarkson Lumber Co Discussion Questions I hope
everyone has a copy of the case. One thing you need to keep ...
Submitted by ketushkiii on May 2, 2008
Category: Business
Words: 1794 | Pages: 8
Views: 133
Popularity Rank: 76,734
Average Member Grade: N/A (Add a Comment / Grade this Paper)
Mr. George Dodge, Clarkson Lumber Company is doing well but there is the issue of whether or not there is too high a risk in granting the request for the $750,000 line of credit. There are many supporting strong points but it also has some problems to work out. This is a company that has many good characteristics and looks promising but needs the extra money to pay off loans, inventory, and supplies. I recommend this company to receive the line of credit.
Looking at the individual ratios seen in exhibit 1 and comparing it to the industry average shown in exhibit 2 gives a sense of where this company stands. Current ratio and quick ratio are really low and have been decreasing. For 1995, the current ratio is 1.15:1, which is less than the industry average of 1.60:1, however to give a better sense of where this stands in the industry, as seen in exhibit 3, it is actually less than the average of the bottom 25% of the industry. The quick ratio is 0.61 is less than the industry is 0.90. Both these ratios serve to point out the lack of cash in this company. The cash flow has been decreasing because, it takes longer to get the money from customers, but the company still needs to pay for its purchases. Also, the company couldn’t go over the $400,000 loan limit, so they were forced to stretch their cash.
Return on sales is decreasing and is below the industry average, but the goods news is that sales and profits have been increasing each year. However, costs of goods are increasing and more inventory is left over each year causing the return on sales to decrease. For 1995, it was 1.7% which is less than the average of 2.44% but is a lot higher than the bottom 25% of companies as seen in exhibit 3, which actually have negative sales return of 0.7%. Return on equity is increasing each year and at a higher rate than industry average. In 1995, it was 20.7%, greater than the average of 18.25% and close to the highest companies in exhibit 3, of 22.1% showing...
You must Login to view the entire paper.
If you are not a member yet, Sign Up for free!