homework_butler lumber company
TRANSCRIPT
Exercise of Case Study
Butler Lumber Company
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.
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。
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。
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%
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。
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。
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%。
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
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
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
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