Clarkson Lumber Company

Clarkson Lumber friendship 1.The main contributing factor would nominate to be that their sales have addd dramatically. There is a quick ripening increase in Clarkson Lumbers forecast and notes payable in recent past. Also on that specify is a shortage of funds arising from the purchase of Mr. Holtz stick to in the business and the additional investments in working large(predicate) associated with companys increase in sales volume. The increases in receivables and inventories are major causes of the need for financing. Another factor is longsighted-term collection period on average from 94 it was 37 and 95 it was 42 a jump of 5 long time. 2.In order to keep up with sales increase, Mr. Clarkson has to either reappearance more stock or borrow more money. Mr. Clarkson on the contrary to selling more stock has bought out his brother in laws share in the company. Mr Clarkson with careful control of operating(a) expenses and by quantity purchases of mate rials at a larger subtraction has managed to forgather the financial needs of the company. In addition, Clarkson had maintained this direct of toil by relying very heavily on traffic credit. 2 B. 1993949596 Total liabilities 45%68%73%72% / kernel assets Days payables 35 47 54 56 actual proportion 2.5 1.6 1.1 1.2 Clarkson Lumber Company position has weakened.

Total liabilities as a % of assets increased easily from 45% to 72%. portion out credit has been stretched from 35 eld in 1993 to 56 days in 1996. Current ratio (CA/CL) has declined tremendously from 2.5 to 1.2. In addition, in the absen ce of improved lucrativeness, go on sales ! growth will lead to a bring forward modify of Clarksons financial condition. 3.Mr. Clarksons idea is to increase profitability by fetching advantage of suppliers brush offs for early contract and in order to see if Mr. Clarksons theory is correct we have to test and see what would be the benefit of taking the price reduction. Clarksons suppliers typically offer a 2% discount for payment within 10 days, but...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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