BMP Lumber Co

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 stern endt growth, which its owner, Mr. non bad(p) of Minnesota Grant, believes is likely to continue into the future. This belief has overhaul Mr. Grant to shut down that BMP requires a bank loan 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 catamenia asset accounts, in particular, scrutinise and accounts receivable, (c) BMP Lumber does non have conterminous fixed assets to touch on a loan of the order of magnitude requested. As a result, we preach that Mr. Grant either go for his accounts receivable and inventory or provide a individualised guarantee to secure a loan from the Victoria subject field Bank (VNB). The anal ysis that leads us to these conclusions is as follows. Examination of the pro-forma equilibrium 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 payment account at year-end.

However, in the near term, with a portion note of $66,000 coming due, BMP Lumber does not have equal liquid assets available to cover this immediate obligation. An examination of BMP Lumbers gumptious ratio (Exhibit 6) indicates that the ratio has deteriorated in Q1 1994 compared to 1993 (5 0% from 63%, respectively). This deteriorat! ion sess 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-embracing essay, order it on our website: BestEssayCheap.com

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