Financial Management and Credit Risk Essay Example | Topics and Well Written Essays - 2750 words

Financial Management and Credit Risk - Essay ExampleThis john signifi jackpottly both increase the interest rate that is charged to the company as well the supererogatory strain to the companys earnings. While the company proves to be profitable, other financial measures show its umpteen weaknesses, especially on the part of its functional capital and cash conversion cycle.By probing at the current financial standing of the company, the companys financial position is seen. With this, the implications of the subsequent financing activities can be determined as regards the overall health of the firm. The company is then faced with a ratiocination of whether to pursue the additional debt financing. If Butler Lumber go with is not going to avail of the financing, it has to at least(prenominal) deal out and avail of some options of financing to meet its financing need. These alternatives are explored in the subsequent portions of this episode study, which include strengthening ca sh generation from the profitable operation of the company through better working capital management, as well as other equity financing means.Butler Lumber high societys main line of business is in retailing lumber products within the local field of study of a large city in the Pacific Northwest. Mark Butler, the companys sole possessor and the president is contemplating an increase in debt financing for its expansion.Butler Lumber Company currently has an existing race with Suburban National Bank, where it gets its additional funding in the form of loans. However, as Mr. Butler reaches the loan prepare of 250,000, he is pondering on availing additional financing for his companys expansion with a revolving recognize line of 465,000 from Northrop National Bank through George Dodge. This is in order for him to secure financing that will address his companys shortage of funds.As the loan has not yet been approved, Butler Lumber Companys financial position is yet to be determined by Northrop National Bank ahead Mr. Dodge can decide on giving the additional financing to Mr. Butler.