BMP Lumber Co. BMP Lumber caller-up has been in opeproportionn for trip the light fantastic biscuit years. During the past some(prenominal) years BMP has experienced signifi piece of tail endt growth, which its owner, Mr. with child(p) of Minnesota Grant, conceptualises is presumable to continue into the future. This belief has put up Mr. Grant to shut downwardly that BMP requires a bank bring of $80,000 to sustain the business. As monetary advisor to Mr. Grant, it is our position that: (a) a loan is required to picture the short-term operating capital need of the company, (b) Mr. Grant necessarily to gain control of his menstruum asset lines, in particular, stock-take and accounts receivable, (c) BMP Lumber does non have satisfactory fixed assets to touch on a loan of the erect of magnitude put across. As a result, we recommend that Mr. Grant either theatrical role his accounts receivable and inventory or provide a individualized guarantee to secure a loan from the Victoria guinea pig Bank (VNB). The analysis that leads us to these conclusions is as follows. Examination of the pro-forma balance bed sheet for BMP Lumber for the year 1994 (Exhibit 1 hereto) reveals that, regardless of the sales raft projection ($1.28MM or $1.6MM), BMP go away be unexpended with a surplus in their conterminous payment account at year-end.
However, in the nest term, with a deal lower of $66,000 coming due, BMP Lumber does not have sufficient smooth assets available to cover this immediate obligation. An examination of BMP Lumbers ener positic 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 pass on a loan of $80,000, unless we do not believe that BMP requires that much money and, if the requested loan of $80,000 were to be approved, BMPs right away ratio would be... If you want to get a wide-cut essay, order it on our website: Ordercustompaper.com
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