Ford Motor Vep

4372 words 18 pages
Corporate Finance Case Study 1
Butler Lumber Company

王金明 1101289036
杜金鹏 1101289039
周 杨 1101289040

In this report, we study the case of Butler Lumber Company and analyze the financing problem it was confronted. In the first part, we give a brief description of the company, including the development process, equity structure, several important financial ratios which shows the basic conditions of the firm. Then we talk about the dilemma the company was facing and give some questions concerned that will be worked out in the later analysis.
In the second part, all of the company’s financial ratios are taken into consideration in order to analyze the financial condition. At first we will discuss the company’s financial
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1.4 A brief statement of the firm’s position
Butler Lumber Company is looking for more cash due to a fast-paced lumber market and a shortage of funding. Their regular bank, Suburban National Bank, is not willing to expand their existing loan to an amount greater than $250,000 without securing the loan with real property. Another loan is being offered by a second bank, Northrop National Bank, for $465,000 with the interest of prime plus 2 and several other requirements. The co-founder, Mark Butler, owes a major note to the other original partner, who Mark bought out. He has a mortgage on his 12-year-old house and no other significant investments. Mark’s personal references indicate that he is hard-working and watches his business very closely. Butler’s business relies more heavily on the repair industry than on new construction, so it is somewhat protected against market fluctuations on new constructions.
Several statistics and tables are listed to give a description of the firm and its president in detail:
1.4.1 Operating Statements

1.4.2 Balance Sheet

The following questions involved in this case are faced by the company and the NN Bank, which should be worked out as soon as possible:
From BLC’s perspective: a. Is BLC a profitable business? b. Why does Mr. Butler have to borrow so much money


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