Lawsons Case Study

1448 Words6 Pages
Executive Summary Jackie Patrick, newly appointed loan officer for the Commercial Bank of Canada must make a decision regarding the loan request made by Paul Mackay of Lawsons, a general retail store in the small town of Riverdale, Ontario. Lawsons has had financial issues in the past, but they turn an annual profit. While they are lacking severely in the management department, the company has potential and a loan could benefit them, but if the wrong decision is made, Jackie’s skills could be doubted as she is being scrutinized by her superiors because she is new in her position. In order to both assist Lawsons and protect the bank and herself, Patrick should grant only a partial increase on the loan, as the added money would benefit…show more content…
In the past three years, Lawsons has increased in profit but steadily decreased in the majority of the other categories. They operate below the industry average in many areas. With their age of accounts receivable, accounts payable and inventory increasing, their efficiency levels are crucially low. Though, the stock and products point directly to the target market with low to mid-end goods, and the economy is healthy. Character (5/10) The sole proprietor for Lawsons is Paul Mackay, a well versed Englishman who moved to Canada in 1998 and opened his own business. Mackay has had some serious issues in the past with repaying loans, as he was not generating enough profit to be able to. Lawsons currently has a substantial amount of loan penalties accumulated from not paying their loans on time, and this could cause issues for the Commercial Bank of Ontario if Patrick grants them the line of credit and they are unable to keep up with the payments. Capacity to Repay (4/10) It is apparent that Lawsons is not in a position to repay debt without many changes occurring both internally and externally. Jackie should not give the current loan request a chance, but instead try and encourage Mackay to make a lesser request and then go from there. Collateral…show more content…
Though Lawsons may not believe it is enough money and go elsewhere, this decision benefits the bank in both regards, as it would not lose money if Lawsons accepts or declines the loan. In regards to Lawsons, this partial increase would be easier for them to pay back and would not leave them or FWL in further debt. Lawsons is essentially a franchise for FWL, and therefore they would have to approve the loan to begin with, but once that is done, everyone can continue work as usual and work at enhancing Lawsons as a business. This decision would benefit Jackie as it is her first official action as a loan officer, and she does not want her superiors to doubt her abilities. Lawsons has potential, but is lacking in strong managerial skills, so granting a partial loan is the more fiscally responsible action for both
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