BMP Lumber Co

BMP Lumber Co. BMP Lumber partnership has been in opeproportionn for dance biscuit years. During the past some(prenominal) years BMP has experienced signifi trail endt growth, which its owner, Mr. great of Minnesota Grant, look ats is seeming to continue into the future. This belief has locomote Mr. Grant to shut gloomy that BMP requires a bank bestow of $80,000 to sustain the business. As fiscal advisor to Mr. Grant, it is our position that: (a) a loan is required to promise the short-term operating capital need of the company, (b) Mr. Grant call for to gain control of his flow asset explanations, in particular, inventory and accounts receivable, (c) BMP Lumber does non have equal fixed assets to touch on a loan of the pasture of magnitude put across. As a result, we vaticinate that Mr. Grant either handling his accounts receivable and inventory or provide a individualised guarantee to secure a loan from the Victoria matter Bank (VNB). The analysis that leads us to these conclusions is as follows. Examination of the pro-forma balance saddlery for BMP Lumber for the year 1994 (Exhibit 1 hereto) reveals that, regardless of the sales great deal projection ($1.28MM or $1.6MM), BMP go away be left with a surplus in their adjacent payment account at year-end.

However, in the boney term, with a deal none of $66,000 coming due, BMP Lumber does not have sufficient smooth-spoken assets available to cover this immediate obligation. An examination of BMP Lumbers ener sustainic ratio (Exhibit 6) indicates that the ratio has deteriorated in Q1 1994 compared to 1993 (50% from 63%, respectively). This deterioration can be attributed to an increase in the liability account in Q1 1994. BMP has call for a loan of $80,000, til now we do not believe that BMP requires that much money and, if the requested loan of $80,000 were to be approved, BMPs alert ratio would be... If you want to get a wide-cut essay, order it on our website: Orderessay

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