Case Report: Cartwright Lumber Company

Cartwright Lumber Company was founded in 1994 as a partnership by Mark Cartwright and Stark. In 2001, Cartwright incorporated the business. The business was located in a large city in the Pacific Northwest and operated in retail distribution of lumber products such as plywood, moldings, sash and door products.

We think that there are four key factors involved in their success. First is competitive customer policy, they offered their customers by quantity discounts and credit terms. Second is their good relationship with suppliers, which can be seen from Bark and other suppliers' opinion in Banks customary investigation. Third is their conservative operation with low operation cost and proportionate plant investment. What's more, Cartwright was a energetic person, hard working with sound judgment, and his good credit help his business successfully. From operational standpoint, company is doing well on basis of successful price competition, careful control of operating expenses and by quantity material purchases at substantial discounts. Telemarketing is also an essential part for its well operation.

Mr. Cartwright must borrow great amounts of money from the bank. The most influential reason is that sales are increasing significantly with short available funds, which leads to higher cost of goods sold so that firm needs more external financing to pay various fees. According to balance sheet, the Current Ratio is approximately 1,40 (932/690) and the Quick Ratio is around 0,50 ((932-556)/690). The Current Ratio is on an adequate level but the Quick Ratio seems to be alarming. This is because the company has a huge inventory.