Clarkson Lumber Company

Clarkson Lumber friendship 1.The main contributing factor would realize to be that their sales have addd dramatically. There is a speedy emersion increase in Clarkson Lumbers account statement and notes payable in recent past. Also on that tip is a shortage of funds arising from the purchase of Mr. Holtz vanquish in the business and the additional investments in working expectant associated with companys increase in sales volume. The increases in receivables and inventories are major causes of the need for financing. Another factor is abundant 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 repartee more stock or borrow more money. Mr. Clarkson on the contrary to selling more stock has bought out his sidekick in laws share in the company. Mr Clarkson with careful control of operating(a) expenses and by quantity purchases of materials at a lar ger subtraction has managed to have the financial needs of the company. In addition, Clarkson had maintained this direct of mathematical product by relying very heavily on traffic credit. 2 B. 1993949596 Total liabilities 45%68%73%72% / inwardness 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%. change over credit has been stretched from 35 age in 1993 to 56 days in 1996. Current ratio (CA/CL) has declined tremendously from 2.5 to 1.2. In addition, in the abse nce of improved lucrativeness, go on sales! growth will lead to a bring forward enfeebling of Clarksons financial condition. 3.Mr. Clarksons idea is to increase profitability by fetching advantage of suppliers brush offs for early mesh and in order to see if Mr. Clarksons theory is strike we have to test and see what would be the benefit of pickings the dismiss. 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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