Butler Lumber Company Case Study Report - 6120 Words

| Corporate Finance Case Study Report â…   | Butler Lumber Company | | | 2010-3-17 | | 陈æ€ ¡ 1091209054 ä ¸ ¥Ã¤ ¼Å¸Ã¦ ´  1091209036 Ã¥ §Å"Ã¥ ¸â€  1091209052 æ•â€"ç ¿â€ 1091209024 Abstract In this report, we study the case of Butler Lumber Company and analyze the financing problem it was facing. First, we give a brief review of the background information of the company. Then we diagnose the business by examining its financial statistics and discover that company was seriously lacking of cash due to the poor operation of working capital and cost control. Free Cash flow is the key concern in our estimation. â€Å"Break-Even Analysis† stressing on the balance of free cash flow is applied in the estimation of the loan amount needed for†¦show more content†¦He also held a $70,000 life insurance policy, payable to his wife. She owned independently a half interest in a house worth about $55,000 | * Illustrative provisions on this kind of notes: 1. Restrictions on additional borrowing would be imposed; 2. Net working capital would have to be maintained at an agreed level; 3. Additional investments in fixed assets could be made only with prior approval of the bank; 4. Limitations would be placed on withdrawals of funds from the business by Butler. 1.3.2 Operating Statements Table 1.2.2 Operating Statements for Years Ending December 31, 1988-1990, and for First Quarter 1991 (thousand of dollars) | | | | | | 1988 | 1989 | 1990 | 1991(Q1) | | | | | | Net sales | $1,697 | $2,013 | $2,694 | $718a | Cost of goods sold: | | | | | Beginning inventory | $183 | $239 | $326 | $418 | Purchases | $1,278 | $1,524 | $2,042 | $660 | | $1,461 | $1,763 | $2,368 | $1,078 | Ending inventory | $239 | $326 | $418 | $556 | Total cost of goods sold | $1,222 | $1,437 | $1,950 | $522 | Gross Profit | $475 |Show MoreRelatedCase Study Butler Lumber3374 Words   |  14 PagesCase Study: Capital Budgeting Butler Lumber Company Abstract Butler Lumber Company, a lumber retailer with a rapid growth rate, is faced with the problem of cash flow shortage. In order to support this profitable business, BLC needs a great amount of cash. 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