Clarkson Lumber Company Clarkson Lumber Company is in retail distribution of lumber products. It was founded by Mr. Clarkson and his brother-in-law, Henry Holtz in 1981. In 1994, Mr. Clarkson bought out Mr. Holtz’s interest for $200,000, payable in 4 semi-annual instalments from June 30, 1995 with interest @11% p.a. Firm has achieved good growth in sales and profits during recent years, but is facing shortage of cash. It expects sales of $5.5 million during CY 1996 and would need additional loan over and above existing loan of $399,000 as on March 31, 1995.
Case Write-Up 1 Clarkson Lumber Company Murat ÖZTAŞ Overview Clarkson Lumber is a company that has been experiencing rapid growth in sales; thus facing a problem of cash shortage to continue its expected growth. Even though Mr. Clarkson was able to manage to have low operating expenses while running the business, the cash flow crisis is coming. Besides the urgent need for cash to recover the liquidity of the company, the owner, Mr. Clarkson has to pay back the note payable (with %11 interest) his former partner’s interest, which he bought out for $200.000 in 1994. Clarkson Company is not generating enough profit to pay off its debt in required amount of time. The financial statements and analysis ratios both indicate that the company is doing well.
The company had both a strong internet and print media following so, Bob Harrell was charged with building a national sales force. Jugenheimer and Kelley note, “After much debate within the brick walls of Glib Media, Bob persuaded his management to establish a commission deal with existing media rep companies as a means of quickly ramping up a national sales arm” (p. 89). The five regional media firms were set up with a sliding commission on sales. In addition, Bob indicated to the firms that Glib Media would only offer a twenty percent discount on media to all their customers and would not negotiate a larger discount. Bob has previously experienced similar requests from other regions and has turned them down when additional discounts on sales have been requested.
STATEMENT OF THE PROBLEM How should Mr. Jerry Eckwood respond to Mr. Cowen’s requests of the renewal of the existing loan of $1,000,000.00 and of an additional $350,000.00 loan? III. POINT OF VIEW AND ASSUMPTIONS Point of View The group decided to use Mr. Jerry Eckwood’s perspective because the decision whether to extend the loan or to grant the additional $350,000.00 lies in his hands. Assumptions: • Hampton Machine Tools Company will surely pay the dividends on December. • St. Louis Bank will use the loan terms (e.g.
The manager cited the resulting high depreciation charges as the justification for the price boost. He asked the president of the company to instruct Division P to buy from S at the $220 price. He supplied the following information: P's annual purchases of component 2,000 units S's unit and batch-related costs per unit $190 S's capacity related costs per unit $20 S's required return on investment $10 Suppose there are no alternative uses of the S facilities. Required 1) Will the company as a whole benefit if P buys from the outside suppliers for $200 per unit? 2) Suppose the selling price of outsiders drops another $15 to $185.
Ford also announced that it would distribute ownership of its Visteon Corp. parts unit to shareholders. Ford’s share price had performed poorly over the previous year (Exhibit 1), and the proposal drew a positive reaction from analysts who had been urging the company for months to distribute cash to stockholders. Some hailed the VEP as the boldest step yet by Ford Chairman William Clay Ford Jr. and Chief Executive Officer Jacques Nasser to convince investors that they were undervaluing the world’s No. 2 automaker. However, the plan raised a number of questions for investors.
Mr. Clarkson was an energetic and hard working man, has personal control over every feature of his business and he possesses sound judgment about his business issues. Mr. Clarkson was actively looking for a new banking relationship where he can negotiate a larger loan than his recent limited loan ceiling ($400,000) offered by Suburban National Bank. He approached Northrup National Bank for a larger loan and the bank had to investigate his financial position, business historical sales and expenses, future forcastes and the owner credibility. Clarkson Lumber is planning to borrow an increasing amounts despite its profitability because he wants to pay off Mr. Holtz in order for himself to become the primary owner of the company. Mr. Clarkson also needs to take a loan so he could
“BTT was interested in distributing Strat and entered into an agreement with Chou whereby BTT paid him $25,000 in exchange for exclusive negotiation rights for a 90-day period” (Melvin, 2011, p. 155). This is a unilateral contract where BTT paid Chou $25,000 in exchange for one performance, which is the exclusive negotiation rights. “Just three days before the expiration of the 90-day period, the parties reached an oral distribution agreement at a meeting” (Melvin, 2011, p. 194). Both parties took part in an oral contract, later a confirmation of the agreement was sent via email. The confirmation included price, time frames, and obligations from both parties.
Charles Schwab & Co., Inc.: The “Talk to Chuck” Background: Incorporated by Charles Schwab (Chuck), Charles Schwab & Co., Inc. was the first company to offer discounted self-service on brokerage fee, giving clients more independence in managing their assets and make transactions without help of traditional brokers. The company grew quickly as it charged 75% less per transaction compared to that of large brokerage firms. This instant success of the company made Bank of America to acquire Charles Schwab & Co in 1983, however Schwab management has bought back all of its shares within four years. Over the course of years, company continued to grow both in terms of number of customers and revenue it generated. The company also launched an online platform and soon became one of the biggest financial services in the industry.
All three options are discussed in detail in the following sections to explain the rationale behind this recommendation. If Bernard does choose to proceed with partnering in this venture, IC would also suggest the following adjustments in order to add value to his investment: 1. IC agrees with the suggestion of Bernard’s friend Bouchek to obtain more ownership and control of the business if Score-eStore.com becomes viable. We believe that Bernard’s idea of adding a clause in the start-up documents would allow him to pay an estimated $250,000 to buy additional shares of 17% in the company at the 18 month mark; thus giving him a controlling share of the company. 2.