Individual Assignment Topic: Apply your understandings of financial statements, working capital management, financial planning to identify, analyze, and propose solutions to the problems presented in “Clarkson Lumber Company” case. Requirements: * Answer all the guideline questions. Support your answer with necessary calculations, forecasts, analysis… * Summarize the problems and propose solutions for “Clarkson Lumber Company” based on your answers and analysis of the guideline questions.
Assessments: * This is an individual assignment. Although you are encouraged to discuss the case with your lecturer and fellow students, you are required to write the report on your own. Any evidence of plagiarisms will result in a disqualification. * Your total score is 100 pts (answers to the guideline questions 60 pts, summary of the problems 10 pts, and proposed solution 30 pts) * Format: use Arial 11; 1. 15 line spacing. * Deadline: March 31st, 2013
Guideline questions: 1. Why has Clarkson Lumber borrowed increasing amounts despite its consistent profitability? (5 pts) 2. How has Mr. Clarkson met the financing needs of the company during the period 1993 through 1995? Has the financial strength of Clarkson Lumber improved or deteriorated? (15 pts) 3. How attractive is it to take the trade discounts? (10 pts) 4. Do you agree with Mr. Clarkson’s estimate of the company’s loan requirements?
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How much will he need to finance the expected expansion in sales to $5. 5 million in 1996 and to take all trade discounts? (15 pts) 5. As Mr. Clarkson’s financial adviser, would you urge him to go ahead with, or to reconsider, his anticipated expansion and his plans for additional debt financing? As the banker, would you approve Mr. Clarkson’s loan request, and if so, what conditions would you put on the loan? (15 pts)
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