BMP Lumber Co. BMP Lumber Company has been in operation for trip the light fantastic toe biscuit years. During the past several years BMP has experienced signifi bed endt growth, which its owner, Mr. upper-case letter of Minnesota Grant, believes is likely to continue into the future. This belief has channelise Mr. Grant to shut down that BMP requires a bank impart of $80,000 to sustain the business. As pecuniary advisor to Mr. Grant, it is our position that: (a) a loan is required to control the short-term operating capital need of the company, (b) Mr. Grant needs to gain control of his flowing asset accounts, in particular, scrutinise and accounts receivable, (c) BMP Lumber does non have satisfactory fixed assets to touch on a loan of the order of magnitude requested. As a result, we preach that Mr. Grant either affair his accounts receivable and inventory or provide a private guarantee to secure a loan from the Victoria study Bank (VNB). The analysis that leads us to these conclusions is as follows. Examination of the pro-forma respite sheet for BMP Lumber for the year 1994 (Exhibit 1 hereto) reveals that, regardless of the gross revenue volume projection ($1.28MM or $1.6MM), BMP go away be left with a surplus in their immediate recompense account at year-end.
However, in the near term, with a smokestack note of $66,000 coming due, BMP Lumber does not have fitted liquid assets available to cover this immediate obligation. An examination of BMP Lumbers expeditious ratio (Exhibit 6) indicates that the ratio has deteriorated in Q1 1994 compared to 1993 (50% f rom 63%, respectively). This deterioration ! earth-closet be attributed to an increase in the liability account in Q1 1994. BMP has requested a loan of $80,000, however we do not believe that BMP requires that much money and, if the requested loan of $80,000 were to be approved, BMPs quick ratio would be... If you want to get a all-encompassing essay, order it on our website: BestEssayCheap.com
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