WhatsApp

Clarkson Lumber Co Financial Analysis Case Study Help


Clarkson Lumber Co Financial Analysis Financial Analysis Case Study HelpThe monetary position of Clarkson Lumber Co Financial Analysis can be assessed by having a look at its ratio analysis.

Declining Profitability:

We can see in appendix 1 how the income has been declining for many years after 2005. The fact that the gross profit margin has decreased as well suggests that the expense of sales have actually not gone down at the same pace. The decreasing web profitability, showing a negative trend from 2006 to 2007 recommends that expenses have increased far more than the company is able to handle given its present resources. With a long term debt adding to the interest cost, Clarkson Lumber Co Financial Analysis remains in dire need of an alternative earnings stream.

Declining Liquidity:

Declining Liquidity: We can see a significant declining pattern in the present ratio too revealing a fall in liquidity which is another point of concern for Clarkson Lumber Co Financial Analysis specifically as it has a long term debt to pay off. With the current assets not in a position to pay off the current liabilities, we can see how the business would be in a significant financial difficulty unless the capital improves with extra sources of financing.

Rising Debt to Assets Ratio:

We might explore the financial condition of Clarkson Lumber Co Financial Analysis even more by looking at the company's total debt to total possessions ratio in appendix 2. We can see how the total assets of the company have actually been decreasing from 2005 onwards. Nevertheless, the long term financial obligation has stayed at $160 million while the short-term financial obligation has increased side by side. Such a situation has brought Clarkson Lumber Co Financial Analysis to a point where its total financial obligation to total assets ratio has increased too. A rising overall financial obligation to total assets ratio suggests that the risk has actually increased in terms of the company's assets not sufficing to cover its overall liabilities. This might not be revealing the total liquidity position however gives clarity in terms of the overall financial position of the business.

/Financial Feasibility