Homework_Butler Lumber Company
Transcript of Homework_Butler Lumber Company
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Exercise of Case Study
Butler Lumber Company
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Alternatives to Solve Problems
Two banks would like to extend the line of borrowings to Butler Lumber Company due to a shortage of cash.
A. Suburban National Bank could offer the maximum
loan of $250. B. Northrop National Bank could offer
the maximum loan of $465.
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Alternatives to Solve Problems
A. Loan Proposal of Suburban National Bank
Advantages Disadvantages
1. 維持 Butler Lumber Company(BLC)與 Suburban National Bank(SNB)的良好合作關係,是維持穩定融資來源的一個重要基礎。
2. 減少借貸上升帶來的的利息壓力。
1. 貸款的規模不足以應付 BLC的快速成長及流動性需要。
2. 現在貨款要求要有實質資產作支撐背景。
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Alternatives to Solve Problems
B. Loan Proposal of Northrop National Bank
Advantages Disadvantages
1. 貸款的規模足以應付 BLC的快速成長及流動性需要。
1. 要訂定貸款信用狀 (LOC),要求 BLC在 1991年末要達到3.6M的銷售額。
2. 提高了 BLC的負債比率。3. 償還利率為 P+2,高達 10.5%,
加大了利息支出的壓力。4. 貸款後隱埋了 BLC資金流動性
不足、應收帳款周轉率與存貨周軟率不斷下降的事實,危機意識下降。
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Financial Analysis
Ratio / Year 1988 1989 1990
Current Ratio 180.00%
158.93%
145.05%
Debt / asset Ratio 54.55%
58.70%
62.70%
Equity / Asset Ratio
45.45%
41.30%
37.30%
A / R Turnover (Times)
9.92 9.07 8.50
Inventory Turnover (Times)
5.11 4.41 4.67
Return on Equity (ROE)
11.48%
11.18%
12.64%
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Financial Analysis Describe the financial conditions of Butler
Lumber Company using financial statements of 1988-1990 .
Question: What is the financial conditions of Butler
Lumber Company, good or bad? Why? 1. Short-term repayment ability Ans: Good or Bad? ------BLC的短期償還能力是差的。
Why? ---- 由 BLC的流動性指標 (Current Ratio)逐年下降的情況可知,BLC償還短期債務的能力是不斷下降的,若公司遇到任何突發的情況需要資金周轉時,公司很可能面臨倒閉的可能。
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2. Financial structure Ans: Good or Bad? ------ BLC的財務結構處於危險水平。Why? ---- 由 BLC的負債比率 (Debt/Asset Ratio)可知公司已經到後很嚴崚的情況,負債不斷上升,已超過 60%到達 62.7%的水平,所有者權益比率 (Equity/Asset Ratio)也不斷下降,代表公司中股東對資產的控制能力越來越低。3. Management Ans:Good or Bad? ------ BLC的管理不善。Why? ---- 由 BLC的應收賬款周轉率 (A/R Turnover times)及存貨周轉率 (Inventory Turnover times)分別由 9.92下降至 8.5 ,由 5.11下降至 4.67,可知管理方法不能使應該收回的款項能迅速收回,而存貨不斷的囤積不能及時的賣出,變現能力低。另外賣不出去的存貨更為倉存帶來額外的壓力。
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4. ProfitabilityAns:Good or Bad? ------ BLC的盈利能力差。Why? ----由數據得知,雖然 ROE是逐年上升的,但是我們將 ROE這一公式折解一下, ROE = (淨收益 / 營業額) ×(營業額 / 總資產) ×(總資產 / 股東權益) = (邊際利潤率) ×(資產周轉) ×(槓桿比率 ) ,我們這裡的 ROE只是因為債務不斷的上升而使總資產 /股東權益這個槓桿比率不斷變大所致的,而實質公司的盈力能力低得驚人,在計算之下約只有 1.63%。
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Projected Income Statement ending 12/31/1991
Sales $3,600
Cost of Goods Sold* 2,592
Gross Profit 1,008
Operating Expenses 894
Interest Expenses** 40
Pre-tax Income 74
Tax*** 14
Net Income 60* ($418 + 2,752 - 578) = $2,592
** ($233 + 409) / 2 × 10.5% + ($57 + 50) / 2 × 11% = $40
*** (50 × 15%) + ($24 × 25%) = $13.5
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Projected Balance Sheet as of 12/31/1991
Assets Amount
Liabilities & Equity
Amount
Cash 53 Bank Loan 409
A / R 431 A / P 360
Inventory 578 Accrued / P 54
Current Asset 1,062 Long term Debt-current
7
Property 216 Current Liabilities
830
Long-term Debt 43
Total Liabilities 873
Equity 405
Total Assets 1,278 Liabilities & Equity
1,278
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Cash Flow Analysis
Items 1991(projected)
1990(actual)
Change(+/-)
Cash $53 $41 +12
A/R 431 317 +114
Inventory 578 418 +160
Property 216 157 +59
Bank loan 409 230 +179
A/P 360 256 +104
Accrued Exp 54 39 +15
L/D-current 7 7 +0
L/D 43 50 -7
Equity 405 348 +57
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Sources and Uses of Funds
Uses of Funds Amount
Sources of Funds
Amount
Account Receivable
+$114
Bank Loan +$179
Inventory +160 Account Payable
+104
Property +59 Accrued Expenses
+15
Repay Long term Debt
+22 Equity +57
Total Uses of Funds
+355 Total Sources of Funds
+355