Why has Clarkson Lumber borrowed increasing amounts despite its professional personfitability? in that location argon a couple of reasons for Mr. Clarkson wanting to increase the amount of borrow that would be takeed to continue with his operations. One of the reasons is that he wants to be agree off Mr. Holtz in ramble for himself to become the autochthonic proprietor of the company. Another reason for the contract to borrow notes is that the elucidate income was growing at a slower account than the operate expenses. Between the long time of 1993-1995 the net income only move up from 60k, 68k ,77k super C respectively. The operating costs for the 3 years rose from 622k, 717k, 940k gramme respectively. Mr. Clarkson take to take out a loan so he could increase the purchasing causality for goods. This would be constituted by Mr. Clarkson having liquid cash to subprogram for prompt payment, which leave lead to acquiring trade discounts and then(prenominal) Mr. C larkson will have a competitive advantage in boundarys of purchase power. 2. How has Mr. Clarkson met the pay needs in the past?The financing needs of the past have been met by taking a term loan of $399,000 that was fixed by the assets the company had. Mr. Clarkson had domination liabilities that were offset printing by the increase in sales. 3. How overmuch will Mr.

Clarkson need to finance the expected expansion in salesto $5.5 million in 1996 and to take all trade discounts?establish on the pro forma balance sheet and the pro forma income statement, Mr. Clarkson would need $750,000 loan. This would be jus tify in terms of using the succeeding(a) fo! rmulas, which is derived from the 1996 Pro Forma proportion Sheet (figures are in thousands): gibe Assets ? Total Liabilities ? cabbage Worth 2179 - 533 ? 1395 = 251Following the 251 that would be... If you want to get a full essay, order it on our website:
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