This website uses cookies to ensure you have the best experience. Learn more

Case Study Wilson Lumber Company

884 words - 4 pages

Question 1Why has Wilson Lumber borrowed increasing amounts despite its consistent profitability?Although the company seems to be profitable, it has faced shortage of cash. It happened due to increase in Accounts Receivable as well as Inventories. On the other hand, Accounts Payable does not increase that rapidly and difficulties regarding cash collection become evident. Furthermore, the cash collection cycle becomes larger (59 days in year 2003, while more than 70 in year 2006).Question 2How has Mr. Wilson met the financing needs of the company during the period 2003 through 2005? Has the financial strength of Wilson Lumber improved or deteriorated? Evaluate Wilson Lumber financial health.During 2003- 2005 the company borrowed money (long term loan) from bank to finance its operations.In general profitability ratios are positive, however, could be higher. That might be a signal of cost reduction. On the other hand, the company becomes less liquid and its liquidity ratios keep dropping within all years. Both liquidity rations inform that there is lack of cash in the company. The leverage ratios show that company has increased its long term debt and now company becomes more financed by debt than equity. As the debt grows, the interest rates become larger and thus the interest coverage ratio becomes smaller. The activity ratios point out that the cash collection cycle becomes larger therefore company faces some serious issues regarding cash collection (59 days in 2003 whereas 78 in year 2006).Question 3To estimate the sustainable growth rate (SGR) that WLC can sustain without further weakening the balance sheet assuming:no change in the ratio of sales to total assets,no change in the ratio of total liabilities to owners' equityno equity issues or repurchasesa return on beginning equity of 20 % ( the 2005 level), anda continuation of the policy of paying no dividends.





Sustainable Rate of Growth





Question 4How attractive is to take the trade discounts ?If Mr. Wilson is offered a discount of 2% for a payment made in 10 days and does not in fact 50 days;If Mr. Wilson offers his customers terms of 2 % discount for payment in 10 days what would cost.a.2/10/50(0.02/(1-0.02))*(360/(50-10))=0.18 % Is 18% interestb.2/10/30(0.02/(1-0.02))*(360/(30-10))=0,36% Is 36% interestI would prefer to take a discount because it has a lower interest rate.Question 5Do you agree with Mr. Wilson's estimate of the company's loan requirements? How much will he need to finance the expected expansion in sales to $ 5.5 million in 2006 and to take all trade discounts?We calculated that Mr. Wilson would need an estimate of...

Find Another Essay On Case study Wilson Lumber Company

Walt Disney Company Case Study

1551 words - 6 pages Walt Disney Company Case Study PART I Why is Disney so successful The success of Disney is a combination of creativity and innovations, and the managerial ability to identify and take advantage of every possible synergy. Walter Disney was the entrepreneur who had the creative skills. Knowing his limitations, he let other people do what he couldn't do good enough himself. This is an important skill, as it leads to quality products being

Lincoln Electric Company: Harvard Case Study

1171 words - 5 pages As we learn from the case study, the Lincoln Electric Company is the largest global manufacturer of machines for welding, which are used in all kinds of construction projects. This means that the company has a large global presence and many employees, so its culture affects thousands of its workers. Even though it is now 2014, the company still has a large market share and very satisfied employees, so clearly the culture leaves employees

Case Study of Callaway Golf Company

2781 words - 11 pages Case Study of Callaway Golf Company Section I. Summary Callaway Golf Company began to take form in 1983, after Ely Reeves Callaway Jr. sold Callaway Vineyard and Winery for a $9 million dollar profit. Shortly after the sell of the winery, Callaway ventured in to the golf equipment industry and bought 50 percent of Hickory Stick USA. Callaway knew from the very beginning that this company’s profits were limited as long as the product line

Case Study-Cooper Tire and Rubber Company

2334 words - 9 pages Introduction"Cooper Tire & Rubber Company, founded in 1914, specializes in the manufacturing and marketing of rubber products for consumers. Products include automobile, truck and motorcycle tires, inner tubes, NVH control systems, automotive sealing, and fluid delivery systems." ( case study on Cooper mainly concentrates on the tire industry, andTherefore the following analysis will be based on

Case study The Walt Disney Company: The Entertainment King

1264 words - 5 pages where the firm operates and in and between all the actions that it is undertaking.Bibliography: - Strategic Management: Concepts, Second Edition (2008), by Mason A. Carpenter and Wm.Gerard Sanders, Pearson Prentice Hall. ISBN-10: 0132341409; ISBN-13: 9780132341400- Harvard online, buy Case study Walt disney

Case Study about Work System Framework of a Company

4058 words - 16 pages Executive Summary TradX is a company that aims to sell furniture to retailers and special targeted companies. By analyzing the case study, which is on TradX Company, we came up with two different work systems for the company's trade actions. The work systems are "Replenish Retailer Inventory" and "Direct Selling." Moreover, the performance variables for the business processes are discussed in detail in the report. The report then talks about

Case study of national insurance company and full analysis of the problems faced by the company

2602 words - 10 pages & insurance company (NII), which is facing various problems like higher employee turnover, lower customer satisfaction, lower levels of motivation among employees etc. in the suggested case study. Help of various other research papers and journal articles has also been taken to underpin the possible reasons of the problems of NII and other similar companies in the same industry and how such problems can affect the overall growth and current

Rendell Company Case Study

910 words - 4 pages Executive SummaryThis report will give us a clear perspective as to what the optimal organizational structure that suits Rendell Company plus some additional control system in attaining the company's main objectives. We will be also tackling the roles, functions and responsibilities of a controller in an organization. This case takes us into Rendell Company which is currently having problems between the corporate controller and the divisional

Treadway Tire Company Case Study

2221 words - 9 pages theme in the comparison reveals that a line foreman may not be in the best position for his talents, then a different position can be offered if the choice is to stay with the company. The sustained follow through with deciding and making tough decisions will require a disciplined effort by all key persons. Conclusion The purpose of this study was to summarize the key issues faced by the Treadway Tire Company and to analyze any mistakes

Case study: Quanlity Funiture Company

1283 words - 5 pages mean the Emporium have not any risk. In fact the Emporium had the same risk, only it did not completely appear. Although the Emporium still had profit, the profit was in the very low level. And from the case statement, we can know the situation would become more difficult on the Jan. Feb. and March, 2002. So Quality Furniture Company need pay more attention to the inventory turnover and current ratio. To the different company, Quality Furniture Company should apply the different solution. In the result, it is better solution to hold to the limit established, but do not press for collection.

Case Study on Bestco company

1015 words - 4 pages getting its payments and was not able to pay its vendors. It created poor credit rating because if Bestco could not get payments from its clients, the company could not have sufficient money to operate its business, in the worst case scenario, all staff members could not get paid. If it could not pay to its vendors, the vendors would no longer supply the materials to manufacture; it would eventually constitute a decline of its business. Because of

Similar Essays

Clarkson Lumber Company Case Study Analysis

1157 words - 5 pages PAGE PAGE 4 Case Analysis: Clarkson Lumber Company Running head: Case Analysis: Clarkson Lumber CompanyCase Analysis: Clarkson Lumber CompanyFrank FoltynUniversity of Maryland University CollegeTMAN 625 section 9044September 10, 20071. Why has Clarkson Lumber borrowed increasing amounts despite its profitability? There are a couple of reasons for Mr. Clarkson wanting to increase the amount of borrowing that would be needed to continue with his

Case Study Wilson S.A Option

1602 words - 6 pages RecognitionAccording to the case, the company recognized its revenue when it is shipped from the mine and the title has passed. Other suggested method could be:* Installment method: under this method income is recognize when the cash are colleted rather than when it is delivered. Applying this method to the company will result in deferred sales and cost of sales therefore since the forward contract sales are reflected in revenue this method could be

Case Study Tony's Company

2439 words - 10 pages viewpoints of international business, discuss how to avoid these mistakes.The background of case studyThis case study states the failure of international business of a medium sized British manufacturer. Tony, as the manager of the international division, charged the project of providing the monitors to the hospitals in a large Latin American country. The order was too large for the company's existing manufacturing capacity, Tony found an Asian

Google Company Case Study

3482 words - 14 pages innovation is Google’s bloodline. In all, employees and stockholders of Google vended their Google share, where it is the first year as a public company. This made a large number of early employer’s become millionaire. Overall this case study investigation outcome help Google to improve the issues in their organization and found way of implementing solution that founded for each issue. Moreover GOOGLEPLEX at GOOGLE, every engineer is encouraged