Clarkson Lumber Company

Mr. George Dodge, Clarkson Lumber Company is doing well besides there is the gist 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 take downs but it also has nigh problems to work out. This is a come with that has many good characteristics and looks hopeful but needs the extra money to pay saturnine loans, inventory, and supplies. I recommend this company to receive the line of credit. looking at at the individual balances seen in give 1 and canvas it to the industry average shown in butt on 2 gives a sense of where this company stands. Current ratio and prompt 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 couldnt go over the $400,000 loan limit, so they were forced to stretch their cash.

commit on sales is decreasing and is below the industry average, but the goods news is that sales and profits have been increasing from each one year. However, costs of goods are increasing and more inventory is leave 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 jalopy higher than the bottom 25% of companies as seen in exhibit 3, which actually have negative sales return of 0.7%. move over 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 that the return... If you motive to get a full essay, order it on our website: Orderessay

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