Fin 4413
Finance 725 Spring 2006
J. E. Hodder
Corporation Finance
Course Schedule
Tuesday, January 17: Introduction
Thursday, January 19: Clarkson Lumber Company Reading: Note on Financial Analysis
a. How is the company 's financial performance? (Examine appropriate financial ratios.) b. Why has Clarkson Lumber borrowed increasing amounts despite its consistent profitability? c. How has Mr. Clarkson met the financing needs of the company during the period 1993 through 1995? Has the financial strength of Clarkson Lumber improved or deteriorated? d. How attractive is it to take trade discounts?
Tuesday, January 24: Clarkson Lumber Company (continued) Reading: a. Note on Financial Forecasting b. Note on Bank Loans
a. How much of a loan will Mr. Clarkson need to finance the expected expansion in sales to $5.5 million in 1996 and to take all the trade discounts? (Prepare a projected income statement for 1996 and a pro forma balance sheet as of December 31, 1996.) b. As Mr. Clarkson’s financial adviser, would you urge him to go ahead with, or to reconsider, his anticipated expansion and plans for additional debt financing? c. As the banker, would you approve Mr. Clarkson’s loan request; and if so, what conditions would you put on the loan?
Thursday, January 26: SureCut Shears, Inc.
a. Evaluate SureCut’s financial performance using standard ratios. b. Why can’t SureCut repay it’s loan on time? In addressing this question, you may find it useful to construct a “sources and uses” statement for the period June 30, 1995 - March 31, 1996.
Tuesday, January 31: SureCut Shears (continued)
a. What actions would you recommend that SureCut take in order to address its financial problems? If Mr. Stewart agrees to a loan extension
J. E. Hodder
Corporation Finance
Course Schedule
Tuesday, January 17: Introduction
Thursday, January 19: Clarkson Lumber Company Reading: Note on Financial Analysis
a. How is the company 's financial performance? (Examine appropriate financial ratios.) b. Why has Clarkson Lumber borrowed increasing amounts despite its consistent profitability? c. How has Mr. Clarkson met the financing needs of the company during the period 1993 through 1995? Has the financial strength of Clarkson Lumber improved or deteriorated? d. How attractive is it to take trade discounts?
Tuesday, January 24: Clarkson Lumber Company (continued) Reading: a. Note on Financial Forecasting b. Note on Bank Loans
a. How much of a loan will Mr. Clarkson need to finance the expected expansion in sales to $5.5 million in 1996 and to take all the trade discounts? (Prepare a projected income statement for 1996 and a pro forma balance sheet as of December 31, 1996.) b. As Mr. Clarkson’s financial adviser, would you urge him to go ahead with, or to reconsider, his anticipated expansion and plans for additional debt financing? c. As the banker, would you approve Mr. Clarkson’s loan request; and if so, what conditions would you put on the loan?
Thursday, January 26: SureCut Shears, Inc.
a. Evaluate SureCut’s financial performance using standard ratios. b. Why can’t SureCut repay it’s loan on time? In addressing this question, you may find it useful to construct a “sources and uses” statement for the period June 30, 1995 - March 31, 1996.
Tuesday, January 31: SureCut Shears (continued)
a. What actions would you recommend that SureCut take in order to address its financial problems? If Mr. Stewart agrees to a loan extension