Cartwright lumber

Cartridge must borrow great amounts to money from the bank. Receivable collection period is increasing which shows the weaker credit control; meanwhile, payable period is also increasing every year which shows that payments are being differed in order to manage the working capital.

What sort of implications does the firms growth suggest? Butler is looking to find a new banking relationship that would allow him to negotiate a much larger unsecured loan.

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How has management met the financing needs of the company? Moreover, operating margin has also increased to 3.

butler lumber case

Later inMr. The Sources and Uses of Funds brings forth a snapshot of the companys cash flows and illustrates the reason behind Butler Lumbers cash deficit.

Due to the rapid growth and a shortage of cash inButler Lumber Company is seeking to take out an additional loan in order for the business to sustain itself and grow in the coming years.

This represents an increase of 2. Butlers Receivable turnover has decreased from 9.

If Butler was able to factor away their receivables they would have more working capital, a flexible funding program that will increase only as their sales increase and also would help Butler take advantage of purchase discounts. The pro-forma analysis we generated is based on recent percent of sales from the years With credit terms of 30 days, the DSO is showing that on average customers are not paying on time and year to year they are paying increasingly later. The Sources and Uses of Funds brings forth a snapshot of the companys cash flows and illustrates the reason behind Butler Lumbers cash deficit. Later in , Mr. Why has Cartwright Lumber borrowed increasing amounts despite its consistent profitability? From operational standpoint, company is doing Nell on basis of successful price competition, careful control of operating expenses and by quantity material purchases at substantial discounts. First is competitive customer policy, they offered their customers by quantity discounts and credit terms.
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Cartwright Lumber Company Case