Cartwright

In: Business and Management

Submitted By jakethesnake
Words 632
Pages 3
Cartwright Lumber Company
Local Distributor of Wood Based Products

Marketing Analysis
Mark Cartwright and Henry Stark opened up Cartwright Lumber Company in 1994. The company is based in a large city in the Pacific Northwest. Most of the company’s distribution was in the local area. Recently in 2004 Cartwright had to borrow money to be able to meet higher sales for the company. However, more money is needed to be able to meet the anticipated sales growth for the future. Cartwright is considering a larger loan that would allow Cartwright Lumber Company to meet any cash needs of the future. I recommend going ahead with the expansion, but for Cartwright to pay for it in house.
Operating Activities
Cartwright Lumber Company had been borrowing money to allow it to realize greater net income. Part of this is due to the fact that Cartwright Lumber Company has been taking longer to collect their account receivables than pay their accounts payable, 58 days compared to 47 days in 2004. If Cartwright were to begin collecting sooner and deferring payment later Cartwright would be able to make the amount needed for borrowing begin to decline.
Cartwright should also look into trying to improve their inventory conversion period. In 2001, it was about 70 days since then it has gone up to a projected 81 days in 2004. If Cartwright was able to cut this back down to 70 days and improve on their cash conversion cycle they may not need a larger note instead funding the $87,000 needed in 2004 by themselves.
Financial Activities
Cartwright has used leverage to his advantage allowing his company to realize greater net income than they would have otherwise. The real problem of concern is that while Cartwright is a profitable business than the negative cash flows of the company puts them at risk to not meet the obligatory requirements of the loan. The negative cash flows primarily…...

Similar Documents

Cartwright

...Overview When Cartwright Lumber Company was originally founded, it was owned by both Mark Cartwright and Henry Stark. However, Cartwright bought out Stark’s interest for $105,000 and became sole owner of the company. To finance this payment, Henry took out a $70,000 loan with an interest rate of 11% secured by land and buildings payable over 10 years at a rate of $7,000 each year. was located in a suburb of a large city in the Pacific Northwest; its operations were limited to the retail distribution of lumber products in the local area. In 1994, Cartwright Lumber Company was established as a partnership by Mark Cartwright and his brother-in-law Henry Stark. However, in 2001, Cartwright brought out Henry’s interest for $105,000 and incorporated the company. About 55% of the total sales of Cartwright Lumber Company were made in the six months from April through September. There were no sales representative; orders were taken exclusively over telephone. Sales volume had been largely on the basis of successful price competition, made possible by careful control of operating expenses and by quantity purchases of material at substantial discounts. Besides, good relationship with suppliers and high loyalty of employees contributed to its success. Cartwright Lumber Company’s financial status was promising; from 2001 to 2004, they experienced an average sales increase rate of about 29.7% yearly. However, debt existed. In order to buy off Stark’s interest, Cartwright got a loan......

Words: 1339 - Pages: 6

Mock Trial

...put in this case. Our job here today is to determine whether or not the defendant Mr. Cartwright was negligent, and that his negligence was the proximate cause of the plaintiff Miss Jamie Franklyn’s horrific injuries. Now ladies and gentlemen of the courtroom, I’d like to readdress that negligence is defined as the failure to exercise, in the given circumstances, that degree of care for the safety of others, which a person ordinary prudence would exercise under similar circumstances. Mr. Cartwright is the official owner of the barn, which makes him liable towards that barn and its care. Regardless of whom he allows in it, and regardless of what he allows them to do in it, he is overall without a doubt responsible. In this case, Mr. Cartwright had violated the duty to maintain the barn in a reasonably safe condition. Our law welcomes us that the duty owed by the owner of a property to a licensee who has the right to enter or remain upon land by the consent of the owner. “A licensee is a person who has the right to enter or remain upon land by the consent of the owner.” They are not invited but their presence is tolerated. The owner of property owes a duty to a licensee to abstain from willfully injurious acts. If the owner knows of a hazardous condition on the property-the owner must either warn of the condition or make the condition reasonably safe”. I am not here saying that Mr. Cartwright had an evil heart or harmful intentions in this incident, although the facts are......

Words: 382 - Pages: 2

Cartwright Questions

...BFIN 4253 – ADVANCED CORPORATE FINANCE “Cartwright Lumber” Case Assignment Case: “Cartwright Lumber Co.” HBS Case #9-204-126, Rev 3/04. Main Question: As Mr. Cartwright’s financial advisor, would you urge him to go ahead with, or to reconsider, his anticipated expansion and his plans for additional debt financing? • He should take the LOC and use trade discounts o Satisfies fund requirement o No collateral o More flexible trade credit limit Additional Questions: 1. Why does Mr. Cartwright have to borrow so much money to support his profitable business? • needs to sustain business and grow in the coming year • increase in inventory and accounts receivable, has not been able to generate cash and A/R ratio and inventory ratio shows taking longer to collect money and holding inventory for longer period • Internal growth rate – 4.72% (44/933) end of 2003 o highest level of growth can achieve without outside financing • Firms sales total growth of 33% o sales are growing almost 10 times faster than internal growth would allow • Sustainable growth rate is highest growth a firm can sustain without the need to increase its financial leverage o Takes into account existing external financing it already has o 12.6% (44/348) much lower than its increasing sales 2. Do you agree with Mr. Cartwright’s estimate of the company’s loan requirements? How much will he need to finance the expected expansion of sales to $3.6 million in 2004? • Yes ...

Words: 416 - Pages: 2

Cartwright Lumber Company

...Cuenta de Resultados 2001 - 1er.t 2004 peso peso 2001 Ventas netas Coste de ventas vendidas Existencias iniciales Compras Existencias finales Coste total de productos vendidos Margen Bruto Gastos de explotación Gasto de intereses Beneficio antes de impuestos Impuesto de sociedades Beneficio neto 1.697 2002 2.013 2003 2.694 especifico 100% 1t 2004 718 418 660 1.078 556 522 196 175 10 11 2 9 especifico 100% Evolución variables 2004 % % % anualizado 2002/2001 2002/2003 2003/2004 2.872 1.672 2.640 4.312 2.224 2.088 784 700 40 44 8 36 18,62% 30,60% 19,25% 20,67% 36,40% 17,59% 21,26% 21,18% 53,85% 10,81% 9,68% 33,83% 36,40% 33,99% 34,32% 28,22% 35,70% 29,17% 27,77% 65,00% 29,27% 29,41% 6,61% 412,88% 29,29% 82,09% 432,06% 7,08% 5,38% 6,38% 21,21% -16,98% -18,18% 183 239 326 1.278 1.524 2.042 1.461 1.763 2.368 239 326 418 1.222 1.437 1.950 475 576 744 425 515 658 13 20 33 37 41 53 6 7 9 31 34 44 76% 92% 16% 72% 28% 24% 1% 2% 77% 73% 27% 24% 1% 2% 2% 1% Balance de Situación 2001 - 1er.t 2004 2001 Liquidez Cuentas a cobrar, neto Existencias Activo Circulante Inmovilizado neto total activo Pagarés, banco Pagarés, Stark Pagarés comerciales suma de pagarés 2002 48 222 326 596 140 736 146 0 0 146 2003 41 317 418 776 157 933 233 0 0 233 1t 2004 31 345 556 932 162 1.094 247 0 157 404 58 171 239 468 126 594 0 105 0 105 Cuentas a pagar Gastos devengados Deuda a largo plazo, parte corriente Pasivo corriente Deuda a largo plazo,...

Words: 358 - Pages: 2

Cartwright Case

...Laboratory 2: Neurosim: Membrane potentials and Action potentials INTRODUCTION NeuroSim is a computer program intended for use in teaching neurophysiology, specifically the concepts associated with the resting membrane potential and the action potential. Within the NeuroSim program is a simulation entitled HH which is based on the equations developed by English physiologists A. L. Hodgkin and A. F. Huxley (J. Physiol. Lond. 117: 500-­‐542, 1952). Much of our current knowledge about the mechanisms of resting membrane potentials and action potentials comes from experiments performed by Hodgkin and Huxley on a giant nerve fiber found in the squid species Loligo forbesi (adult squid weight 3.5 lb, adult squid length 14 in). Because of the large diameter of their axons (up to 0.8 mm), it became a convenient model for elecrophysiological research using small intracellular microelectrodes (tip diameter < 0.5 μm). With two microelectrodes, researchers were able to detect an electrical potential difference between...

Words: 3556 - Pages: 15

Angus Cartwright

...Angus Cartwright Case Study In September 2003, John DeRight and Judy DeRight, both cousins, decided that they both wanted to invest in real estate. The cousins felt that real estate would allow them the “benefits of diversification, protection from future inflation, and tax advantages.” John, a risk averse person, was a retired businessman and was willing to spend $9 million in this investment. John would rely on stock dividends and other income that totaled approximately $1 million. On the other hand, Judy was a risk tolerant businesswoman who owned her own chemical company and had $16 million of funds available for investment. Judy’s after-tax income came out to be approximately $1.1 million. The cousins contacted Angus Cartwright III, an investment advisor who showed John and Judy four different properties that had different circumstances. The properties consisted of residential and office buildings and there were properties that were both currently standing and under construction. Cartwright III, like his father, had plenty of experience with the DeRight family, and so he showed John and Judy the four properties. The first property was Alison Green, a 100-unit apartment in Maryland. It has the highest Net Present Value at $734 and has the lowest breakeven occupancy at 64%. It has the best debt coverage ratio at 2 and highest cash-on-cash at 12%. Based on calculations, 74% of total benefits will be derived from cash flow while 44% of total benefits will come via......

Words: 955 - Pages: 4

Angus Cartwright Case

...Question 1: John and Judy DeRight are cousins whom share the same investment manager, Angus Cartwright, III, and are both looking to diversify their assets in future investments. Judy is the owner of her own chemical company that earns in excess of $1.6 million before taxes and $1.1 million after taxes per year. Although she has received numerous offers, Judy does not wish to be bought out by anyone and thus desires to diversify the investments she already owns. She currently has over $16 million dollars in securities, which she wants to invest in outside investments. Judy DeRight is thus a business owner with a stable income, and is fairly risk tolerant as she is closer away from retirement than her cousin. John on the other hand is at a completely different part of his professional life than is Judy. Unlike Judy, John sold his company recently and now has $18 million in stocks from the acquiring company. After this sale, he decided to retire and live off the $500,000 dividends the stocks pay and another $500,000 from his own other income. He is willing to sell up to $9 million of his stock shares to fund any future investments. Because he is retired, John is risk averse with his desired investments. Both Judy and John have a few goals that they share in common. They both want to invest in a property large enough that will attract property management companies to do the daily maintenance on that property. That way, they don’t have to do it themselves. They also want to......

Words: 2014 - Pages: 9

Cartwright Lymber

...1 ) Mr. Cartwright has to borrow substantial amounts of money due to various reasons. The most influential reason is probably the fact that the firm’s sales are rising rather fast compared to available funds. This leads to higher cost of goods sold and means that the firm needs more and more external financing to pay its invoices. Cartwright Lumber Company’s current ratio and quick ratio’s stand by this fact. The Current Ratio is approximately 1,40 (932/690) and the Quick Ratio is around 0,50 ((932-556)/690). The Current Ratio seems to be on an adequate level but the Quick Ratio can be considered to be alarming. This is because the company has such a large inventory. The Quick Ratio is considered to give a more realistic picture of the firm’s short-term financing ability because inventory can’t necessary be realized to liquid funds. The poor status of these ratios leads to the situation where the company can’t use the offered purchase discounts. The Internal growth rate of a company is the highest level of growth it can achieve without outside financing. Cartwright Lumber’s Internal growth rate is 4,72 % (44 / 933) at the end of 2003. The firm’s sales are predicted to increase to 3,6 million from 2,7 million in2004, which is a total growth of 33%. Thus the sales are growing almost 10 times faster than the internal growth rate would allow. The sustainable growth rate is the highest growth rate a firm can sustain without the need to increase its financial leverage. The......

Words: 341 - Pages: 2

Cartwright

...Cartwright Lumber Company was founded in 1994 as a partnership by Mark Cartwright and Stark. In 2001, Cartwright incorporated the business. The business was located in a large city in the Pacific Northwest and operated in retail distribution of lumber products such as plywood, moldings, sash and door products. We think that there are four key factors involved in their success. First is competitive customer policy, they offered their customers by quantity discounts and credit terms. Second is their good relationship with suppliers, which can be seen from Bark and other suppliers' opinion in Banks customary investigation. Third is their conservative operation with low operation cost and proportionate plant investment. What's more, Cartwright was a energetic person, hard working with sound judgment, and his good credit help his business successfully. From operational standpoint, company is doing well on basis of successful price competition, careful control of operating expenses and by quantity material purchases at substantial discounts. Telemarketing is also an essential part for its well operation. Mr. Cartwright must borrow great amounts of money from the bank. The most influential reason is that sales are increasing significantly with short available funds, which leads to higher cost of goods sold so that firm needs more external financing to pay various fees. According to balance sheet, the Current Ratio is approximately 1,40 (932/690) and the Quick Ratio is around......

Words: 440 - Pages: 2

The Clinical Maxim Preview

...BOOK REVIEW Review of The Twenty-four Hour Mind: The Role of Sleep and Dreaming in Our Emotional Lives by Rosalind Cartwright 224 pages Oxford University Press, USA; * edition (June 24, 2010) Patrick McNamara, Ph.D. T his is a book of many virtues. It gives us an insider look at the birth of the sleep medicine specialty. It provides, in clear entertaining, first person-prose a first rate primer on the latest {"indings in sleep science. It speaks with the voice of a mature, humane, sane, and brilliant clinician. Most impressively it lays out in convincing detail the argument for the theory of the 24 mind. That theory, as I understand it, suggests that selected regions of the mind/brain are active and functional 24 hours a day. The mind sleeps both at night and during the day and conversely it does not just simply shut off during sleep, but instead performs vital physiologic and cognitive functions during sleep. REM sleep and dreams may help to down-regulate disturbing emotions. Portions of NRFM sleep may help to select memories that will be passed onto to REM for sorting and then long term storage. Unlike other sleep scientists Cartwright never neglected the role of dreams in the theory of the 24 hour Mind. Dreams likely play several functional roles-among them Address reprint requests to: Patrick McNamara, Ph.D. Boston University School of Medicine and VA Boston Healthcare Systetn, 72 East Concord St., B528, Boston, MA 02118; telephone: (617) 414-1005; fax (617)......

Words: 1228 - Pages: 5

Cartwright

...Jose Mota Dr. Bowens AFAS 200 25 September 2014 The Invisible Man “The Invisible Man”, written by Ralph Ellison is a literature book that was first published in early 1950’s and was immediately a masterpiece. The book is about the life of an African American narrator through his trials and suffering in a small Southern town and as a man that was never visible. The book is titled “The Invisible Man” because the Ellison wants the readers to be aware he was not invisible by a supernatural cause or and an experiment, but he’s invisible due to the fact of others unwilling to notice his existence because of the color of his skin. The narrator didn’t let his invisibility stop him because he viewed it as a constant aggravation; this suffering pain led his ways to make others recognize him. This literature by Ralph Ellison, “The Invisible Man,” shows an image to its readers what life is like for a black person during that time, they lived life but yet were noticed, they were invisible. The narrator secretly lived for free in a shut-off section of a basement of the Monopolized Light and Power Company, where he was stealing electricity from them in order to have light. What got the narrator through the times was that enjoyed listening to jazz music mainly Louis Armstrong’s music, in his secretive underground basement, this helped calm the narrator’s soul and block out struggles throughout the book. He often went into a fantasy world and escape with the music; he would imagine a scene......

Words: 698 - Pages: 3

Kkkk

...2004 Cartwright Lumber Company After a rapid growth in its business during recent years, the Cartwright Lumber Company in the spring of 2004 anticipated a further substantial increase in sales. Despite good profits, the company had experienced a shortage of cash and had found it necessary to increase its borrowing from Suburban National Bank to $247,000 in the spring of 2004. The maximum loan that Suburban National would make to any one borrower was $250,000, and Cartwright had been able to stay within this limit only be relying very heavily on trade credit. In addition, Suburban was now asking that Cartwright secure the loan with its real property. Mark Cartwright, sole owner and president of the Cartwright Lumber Company, was therefore looking elsewhere for a new banking relationship where he would be able to negotiate a larger and unsecured loan. Cartwright had recently been introduced by a friend to George Dodge, an officer of a much larger bank, Northrop National Bank. The two men had tentatively discussed the possibility that Northrop Bank might extend a line of credit to Cartwright Lumber up to a maximum amount of $465,000. Cartwright thought that a loan of this size would more than meet his foreseeable needs, but he was eager for the flexibility that a line of credit of this size would provide. After this discussion, Dodge had arranged for the credit department of Northrop National Bank to investigate Mark Cartwright and his company. The Cartwright......

Words: 2060 - Pages: 9

Student

...2004 Cartwright Lumber Company After a rapid growth in its business during recent years, the Cartwright Lumber Company in the spring of 2004 anticipated a further substantial increase in sales. Despite good profits, the company had experienced a shortage of cash and had found it necessary to increase its borrowing from Suburban National Bank to $247,000 in the spring of 2004. The maximum loan that Suburban National would make to any one borrower was $250,000, and Cartwright had been able to stay within this limit only be relying very heavily on trade credit. In addition, Suburban was now asking that Cartwright secure the loan with its real property. Mark Cartwright, sole owner and president of the Cartwright Lumber Company, was therefore looking elsewhere for a new banking relationship where he would be able to negotiate a larger and unsecured loan. Cartwright had recently been introduced by a friend to George Dodge, an officer of a much larger bank, Northrop National Bank. The two men had tentatively discussed the possibility that Northrop Bank might extend a line of credit to Cartwright Lumber up to a maximum amount of $465,000. Cartwright thought that a loan of this size would more than meet his foreseeable needs, but he was eager for the flexibility that a line of credit of this size would provide. After this discussion, Dodge had arranged for the credit department of Northrop National Bank to investigate Mark Cartwright and his company. The Cartwright......

Words: 1956 - Pages: 8

Clc - Cash Flow C

...Cartwright Lumber Company After a rapid growth in its business during recent years, the Cartwright Lumber Company in the spring of 2004 anticipated a further substantial increase in sales. Despite good profits, the company had experienced a shortage of cash and had found it necessary to increase its borrowing from Suburban National Bank to $247,000 in the spring of 2004. The maximum loan that Suburban National would make to any one borrower was $250,000, and Cartwright had been able to stay within this limit only be relying very heavily on trade credit. In addition, Suburban was now asking that Cartwright secure the loan with its real property. Mark Cartwright, sole owner and president of the Cartwright Lumber Company, was therefore looking elsewhere for a new banking relationship where he would be able to negotiate a larger and unsecured loan. Cartwright had recently been introduced by a friend to George Dodge, an officer of a much larger bank, Northrop National Bank. The two men had tentatively discussed the possibility that Northrop Bank might extend a line of credit to Cartwright Lumber up to a maximum amount of $465,000. Cartwright thought that a loan of this size would more than meet his foreseeable needs, but he was eager for the flexibility that a line of credit of this size would provide. After this discussion, Dodge had arranged for the credit department of Northrop National Bank to investigate Mark Cartwright and his company. The Cartwright Lumber......

Words: 1754 - Pages: 8

Cartwright

...1. Why has Cartwright Lumber borrowed increasing amounts despite its consistent profitability? Cartwright lumber has had to borrow substantial amounts of money due to the fact that the firm is a growing company with sales rising quickly. In order for the company to sustain this growth rate, they will have to get additional external funding. Growth in sales nearly doubled from 2001 to 2003, with a percentage growth of 18% and 34% in 2002 & 2003 respectively. While sales are growing steadily, the company’s cash is steadily decreasing year to year by 20% and 17% in 2002 and 2003. Taken together with the fact that accounts receivable has grown at a higher rate than sales, 30% & 42%, this firm can not support the growing sales relying on its assets. The DSO ratio for accounts receivable is 36.28, 39.70 & 42.36 in 2001, 2002, and 2003 respectively. With credit terms of 30 days, the DSO is showing that on average customers are not paying on time and year to year they are paying increasingly later. All these factors combined demonstrate poor management of the firm’s assets. This is the reason why the firm is primarily relying on its debts to sustain the increase in sales growth. 2. How has management met the financing needs of the company? Has the financial strength of the company improved or worsened? In an effort to sustain the increase in sales, management has continually raised funding through borrowing from both the bank & its suppliers. The firm......

Words: 606 - Pages: 3

Heaven's Trail - Lethal Mind (Japanese Edition) [2018] [320 KBPS][Pradyutvam] | Рассыпая серебро Single | Oldandyoung Gangbang