巴特勒公司案例
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巴特勒公司案例
【篇一：巴特勒公司案例】
butlerlumber company after rapidgrowth
itsbusiness during recent years, butlerlumber
company
1991anticipated furthersubstantial
increase e good profits, companyhad experienced
hadfound increaseits borrowing from
suburbannational bank maximumloan suburbannational
would
make anyone borrower butlerhad been able
staywithin limitonly relyingvery heavily
tradecredit.
addition,suburban nowasking
butlersecure itsreal property（不动产）. mark butler,
sole owner
butlerlumber company,
thereforelooking elsewhere newbanking relationship
where he would
unsecuredloan. butler had
recently been introduced georgedodge, muchlarger
bank, northropnational
bank. twomen had
tentatively discussed northropbank might extend
butlerlumber up maximumamount
$$465, thought
sizewould provide. after discussion,dodge had
arranged creditdepartment
northropnational
bank investigatemark butler hiscompany.
butlerlumber company had been founded
markbutler hisbrother-in-law, henry stark.
1988butler bought out stark’s interest had
take paidoff givebutler time
financingnecessary majorportion fundsneeded
$$70,000,negotiated
late1988. buildings,carried
interestrate quarterlyinstallments yearover next10
years. growingsuburb
largecity
pacificnorthwest. companyowned land
railroadsiding,and two large storage buildings had
been erected companysoperations were limited
retaildistribution lumberproducts localarea.
typical
products included plywood, moldings,
doorproducts. quantity discounts creditterms net30
days
operaccount were usually offered volume
had been built up largely successfulprice
competition, made possible carefulcontrol
operatingexpense quantitypurchases substantialhbs
casesare developed solely
endorsements,sources primarydata,
ineffectivemanagement. copyright@1991
president order copies requestpermission
reproducematerials, call 1-800-545-7685,write
harvaard business school publishing,boston,ma
02163,
publicationmay retrievalsystem,used
spreadsheet,ortransmitted anyform
anymeans-
electronic
,mechanical,photocopying,recording,or otherwise-
without harvardbusiness school.
discounts.
much doorproducts, which constituted significant
items sales,were used repairwork. about
55%
totalsales were made sixmonths from april through
september. salesrepresentatives were
employed,orders being taken exclusively over
sales $$1,697,000in1988,$$2,013,000
1989,and$$2,694,000 1990yielded after- tax
profits 1988,$$34,000 $$44,000in1990.1 operating
statements years1988-1990 threemonths ending
march 31,1991, markbutler energeticman, 39 years
age,who worked long hours assistantwho,
northropnational bank, hasbeen doing cando about
everything butlerdoes otheremployees numbered
10 early1991, whomworked drovetrucks
whomassisted itscustomary investigation
prospectiveborrowers, northropnational bank sent
inquiries
concerning mark butler hadbusiness
dealings hislarge suppliers, barkercompany, wrote
conservativeoperation hisbusiness appeals has
wastedhis money disproportionateplant
investment. his operating expenses
couldpossibly hehas personal control over every
feature
hisbusiness, hepossesses sound
judgment workharder than anyone haveever known.
goodpersonality, gives him goodturnover;
frommy personal experience watchinghim work,
hekeeps
close check hisown credits. all
othertrade letters received bankbore out
lumberbusiness, which has
his major source
income,butler held jointly hiswife househad cost
$$72,000 $$38, also held
$$70,000life insurance
policy, payable hiswife. she owned independently
halfinterest houseworth about
$$55,000.
otherwise, sizeablepersonal investments. bankgave
particular attention debtposition
currentratio
readymarket company’sproducts alltimes
salesprospects were favorable.
bank’sinvestigator reported: “sales reach$$3.6
million mayexceed lumbershould rise substantially
nearfuture.” otherhand, generaleconomic
downturn might slow down lumber’s sales,
however, were protected somedegree from
fluctuations newhousing construction because
relativelyhigh proportion itsrepair business.
projections beyond 1991 were difficult
prospectsappeared
good continuedgrowth
butlerlumber’s business over foreseeablefuture.
bankalso noted rapidincrease
butlerlumber’s
accounts notespayable recentpast, especially al
terms tradeprovides
paymentsmade within 10
days invoicedate. accounts were due 30days
invoiceprice, suppliersordinary
did
paymentslagged somewhat behind duedate. during
lasttwo years, butler had taken very few
purchase discounts because fundsarising from
his purchase stark’sinterest additionalinvestments
workingcapital associated company’sincreasing
sales volume. trade credit seriouslyextended
butlerstrove holdhis bank borrowing within
$$250,000ceiling imposed suburbannational bank.
balance
sheets december31,1988-1990,and march
31,1991,are presented tentativediscussions between
george dodge markbutler had been about
revolving,secured 90-day note exceed$$465, specific
detail loanhad beenworked out, dodgehad
explained agreementwould involve
standardcovenants(立
书保证) applying cited
illustrativeprovisions additionalborrowing would
networking capital (营
运资金净额)would have
agreedlevel, additionalinvestments fixedassets
could madeonly priorapproval
limitationswould
fundsfrom st would floating-ratebasis
percentagepoints above
primerate(the rate paid
bank’smost creditworthy customers).dodge indicated
initialrate paidwould
about10.5% under
conditions men also understood butlerwould sever
分开his
relationship suburbannational bank
heentered loanagreement northropnational bank.
salesin1986
1987amounted
＄1,103,000,respectively; profit data lateryears
because shiftfrom corporateform
corporation,butler itsfirst ＄50,000
next＄25,000 alladditional income above ＄75000.
exhibit
operatingstatements yearsending
december 31, 1988-1990, firstquarter
1991(thousands dollars)1988
1989 1990 first
quarter 1991 net sales $$1,697 $$2,013 $$2,694 $$718
goodssold beginning inventory 183
239 326 418
purchases 1,278 1,524 2,042 660 $$1,461 $$1,763
$$2,368 $$1,078 ending inventory 239
326 418 556
total cost goodssold $$1,222 $$1,437 $$1,950 522
gross profit 475 576 744 196 operating
expense
425515 658 175 interest expense 13 20 33 10 net
income before taxes 11provision
incometaxes
netincome firstquarter 1990sales operatingexpenses
include cashsalary
1989,$$85,000 firstquarter
1991,mr. butler also received some
perquisitescommonly taken
privatelyheld
businesses. exhibit balancesheets
december31,1988-1990,and march
31,1991(thousands dollars)1988 1989 1990 first
quarter 1991 cash 58 48 41 31 accounts receivable,
net 171 222 317 345 inventory 239 326 418 556
current assets 468 596 776 932 property, net 126
140 157 162 total assets 594 736 933 1094
notes payable, bank 146 233 247 notes payable, mr.
stark 105 notes payable, trade 157 accounts
payable 124 192 256 243 accrued expenses 24 30 39
36 long-term debt, current portion
currentliabilities 260 375 535 690 long-term debt
64 57 50 47 net
worth 324 432 585 737 net
worth 270 304 348 357 total liabilities networth
594 736 933 1094 study
questions: butler
lumber company whydoes mr. butler have borrowmoney
profitablebusiness?
consideringclosing his
line suburbannational bank newone northropbank.
how much
neededfrom northrop financehis
operations calculatehis financing need, you
projectwhat his balance
sheet would look like
unt bankfinancing he amountunder “notes payable,
bank.”
projecthis balance sheet 1991,assume
hissales $$3.6million heexpects) calculateother
items your“pro-
forma” financial statements
follows(you may use other assumptions youcan show
projectedincome
statement: cogs:assume
constant operatingexpense: assume constant
interestexpense: assume
number,say $$34,000
(don’t worry about where comesfrom; we
“wrong”anyway taxes:assume constant
pre-taxnet
income projectedbalance sheet： cash:assume
constant accountsreceivable: assume
constant
inventory:assume constant property:assume constant
notespayable, trade: zero (he wants
getrid
supplierloans!) accountspayable: assume constant
accruedexpenses: assume constant
longterm debt
numbers: continue payoff $$7,000 annually networth:
calculate 1991net income
lastyear’s net worth
givenyour findings creditline requestingfrom
northrop enough? doyou
see alternative uses
balancesheet creditline upward downward?possible
exam questions: butler
lumber company
butler’ssales accountreceivable 1990were
$$2,694,000 bankloan interestrate
10.5%.pleasefind: averagedays collectpayments
from its clients; highestinterest rate bankcould
possibly charge 10230term offered
itscustomers; loanamount butler could possibly cut
due
speedycollection. weprojected
accountpayable $$360, paymentoffered itssuppliers
(10230),
please find: averagedays payits
suppliers; butlercould possibly delay interestrate
10.5%charged
newaccount payable butlerwere
allowed doso.
【篇二：巴特勒公司案例】
butler
lumber company
after a rapid growth in its
business during recent years, the
butler
lumber company in the spring of 1991 anticipated a
further substantial increase in sales. despite
good profits, the
company had experienced a
shortage of cash and had found it
necessary to
increase its borrowing from the suburban
national bank to $$247,000 in the spring of
1991. the maximum
loan that suburban national
would make to any one borrower
was $$250,000,
and butler had been able to stay within this limit
only by relying very heavily on trade
credit. in addition,
suburban was now asking
that butler secure the loan with its
real
property（不动产）. mark butler, sole owner and
president
of the butler lumber company, was
therefore looking elsewhere
for a new banking
relationship where he would be able to
negotiate a larger and unsecured loan.
butler had recently been introduced by a
friend to george
dodge, an officer of a much
larger bank, the northrop national
bank. the
two men had tentatively discussed the possibility
that the northrop bank might extend a line of
credit to butler
lumber up to a maximum amount
of $$465,000. butler thought
that a loan of
this size would provide. after this discussion,
dodge had arranged for the credit department
of the northrop
national bank to investigate
mark butler and his company.
the butler
lumber company had been founded in 1981 as a
partnership by mark butler and his brother-in-
law, henry stark.
in 1988
butler
bought out stark’s interest for $$105,000 and
incorporated the business. stark had take a
note for $$105,000,
to be paid off in 1989, to
give butler time to arrange for the
financing
necessary to make the payment of $$105,000 to him.
the major portion of the funds needed for this
payment was
raised by a loan of $$70,000,
negotiated in late 1988. this loan
was secured
by land and buildings, carried an interest rate of
11%, and was repayable in quarterly
installments at the rate of
$$7,000 a year over
the next 10 years.
the business was
located in a growing suburb of a large city in
the pacific northwest. the company owned land
with access to
a railroad siding,and two large
storage buildings had been
erected on this
land. the company s operations were limited to
the retail distribution of lumber products in
the local area.
typical products included
plywood, moldings, and sash and
door products.
quantity discounts and credit terms of net 30
days on oper account were usually offered to
customers.
sales volume had been built up
largely on the basis of
successful price
competition, made possible by careful control
of operating expense and by quantity purchases
of materials at
substantial
hbs
casesare developed solely as the basis for class
are not intended to serve as endorsements,
sources of primary data, or
illustrations of effective or
ineffective
management. copyright@1991 president and
fellows of harvard order copies or request
permission to
reproduce materials,
call 1-800-545-7685,write harvaard
business
school publishing,boston,ma 02163, or go to . no
part
of this publication may be
reproduced,stored in a retrieval
system,used
in a spreadsheet,or transmitted in any form or by
any
means-electronic
,mechanical,photocopying,recording,or
otherwise-without the permission of harvard
business school.
discounts. much of the
moldings and sash and door products,
which
constituted significant items of sales, were used
for
repair work. about 55% of total sales were
made in the six
months from april through
september. no sales
representatives were
employed,orders being taken exclusively
over
the sales of $$1,697,000
in1988,$$2,013,000 in
1989,and $$2,694,000 in 1990 yielded after-
tax
profits of $$31,000 in 1988, $$34,000 in 1989, and
$$44,000
in1990.1 operating statements for the
years 1988-1990 and for
the three months
ending march 31,1991, are given in exhibit 1.
mark butler was an energetic man, 39 years of
age, who
worked long hours on the jib. he was
helped by an assistant
who, in the words of
the investigator of the northrop national
bank, “ has been doing and can do about
everything that butler
does in the
organization. ” other employees numbered 10 in
early 1991, 5 of whom worked in the yard and
drove trucks and
5 of whom assisted in the
office and in sales.
as part of its
customary investigation of prospective borrowers,
the northrop national bank sent inquiries
concerning mark
butler to a number of firms
that had business dealings with
him. the
manager of one of his large suppliers, the barker
company, wrote in answer:
the
conservative operation of his business appeals to
us. he
has not wasted his money in
disproportionate plant investment.
his
operating expenses are as low as they could
possibly be.
he has personal control over
every feature of his business, and
he
possesses sound judgment and a willingness to work
harder than anyone i have ever known. this,
with a good
personality, gives him a good
turnover; and from my personal
experience in watching him work, i know
that he keeps close
check on his own
credits.
all the other trade letters
received by the bank bore out this
opinion.
in addition to owning the
lumber business, which has his
major source of
income, butler held jointly with his wife an
equity in their home. the house had cost
$$72,000 to build in
1979 and was mortgaged for
$$38,000. he also held a $$70,000
life insurance
policy, payable to his wife. she owned
independently a half interest in a house worth
about $$55,000.
otherwise, they had no sizeable
personal investments.
the bank gave
particular attention to the debt position and
current ratio of the business. it noted the
ready market for the
company’s products at all
times and the fact that sales
prospects were
favorable. the
the bank also noted the
rapid increase in butler lumber’s
accounts and
notes payable in the recent past, especially in
the spring of usual terms of purchase in the
trade
provides for a discount of 2% for
payments made within 10
days of invoice date.
accounts were due in 30 days at the
invoice
price, but suppliers ordinary did not object if
payments
lagged somewhat behind the due date.
during the last two
years, butler had taken
very few purchase discounts because
of the
shortage of funds arising from his purchase of
stark’s
interest in the business and the
additional investments in
working capital
associated with the company’s increasing
sales
volume. trade credit was seriously extended in the
spring
of 1991 as butler strove to hold his
bank borrowing within the
$$250,000 ceiling
imposed by the suburban national bank.
balance
sheets at