Question: Why has Clarkson Lumber borrowed increasing amounts despite its consistent profitability? How has Mr. Clarkson met the financing needs of the company during the period

Why has Clarkson Lumber borrowed increasing amounts despite its consistent profitability?

How has Mr. Clarkson met the financing needs of the company during the period 1993 through 1995? Has the financial strength of Clarkson Lumber improved or deteriorated?

Do you agree with Mr. Clarksons estimate of the companys loan requirements? How much will he need to finance the expected expansion in sales to $5.5 million in 1996 and to take all trade discounts?

As Mr. Clarksons financial adviser, would you urge him to go ahead with, or to reconsider, his anticipated expansion and his plans for additional debt financing? As the banker, would you approve Mr. Clarksons loan request and, if so, what conditions would you put on the loans?

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