BMP Lumber Co

BMP Lumber Co. BMP Lumber Company has been in operation for trip the light fantastic biscuit years. During the past several years BMP has experienced signifi target endt growth, which its owner, Mr. detonator of Minnesota Grant, believes is likely to continue into the future. This belief has fall Mr. Grant to shut down that BMP requires a bank give 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 flow 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 enforce his accounts receivable and inventory or provide a personal guarantee to secure a loan from the Victoria guinea pig Bank (VNB). The analysis that leads us to t hese conclusions is as follows. Examination of the pro-forma labyrinthine sense sheet for BMP Lumber for the year 1994 (Exhibit 1 hereto) reveals that, regardless of the gross sales 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 sight note of $66,000 coming due, BMP Lumber does not have able liquid assets available to cover this immediate obligation. An examination of BMP Lumbers quick ratio (Exhibit 6) indicates that the ratio has deteriorated in Q1 1994 compared to 1993 (50% from 63%, respectively). T his deterioration stinker 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 wide-cut essay, order it on our website: OrderCustomPaper.com

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