Case presentation 2:

Butler Lumber Company

Team 6
Question 1:

 1.Money from earnings does not provide

enough capital for expected growth.

 2. Cash reserves decreased from 1988-1990

 3. From 1988-1990 Butler averaged 44.6 days

to pay vendors and forfeited 2% discount

 4.Day sales outstanding increased to 42.9 and

decreased cash available
 5.Money was tied up in inventory.  Day's
sales in inventory averaged 77.5.

 6.Increased accrued expenses and

capital expenditures had to be made to
keep up with growth

 7. Interest in Henry Stark was bought out

in 1988 with long term debt
Question 2 : LOAN REQUIREMENT

Company Estimate- $465,000

Group Estimate- $358,000

Question 3:

Suggestions Banker:
 Refinance long-term
 DSI : Decrease
 Account payable:
debt
 Assets collateralize
Utilized discount
 Account receivable:
note
 Restrict distributions
Bring collection time
down and salary
 Approval of capital
expenditures