Management of Organization Lawsons Case - 2235 Words

COMM 1007EL-01 Management of Organization â… ¡ Case: LAWSONS Instructor: J. Austin Davey Date: January 29, 2014 Executive Summary Jackie Patrick, a newly appointed loans officer for the Commercial Bank of Ontario, needs to make a decision about whether or not to accept the request for a $194,000 bank loan and a $26,000 line of credit from Paul Mackay, sole proprietor of Lawsons, a general merchandising retailer in Riverdale, Ontario. According to the ratio analysis and changes in cash flow, it is necessary for Lawsons to seek less expensive debt. Based on the projected financial statements, it is reasonable to grant partial amount. According to analysis, 4 alternatives are given: 1. Do not grant the loan 2. Grant the†¦show more content†¦Current liabilities are too large, Lawsons should pay attention to it. Efficiency Age of receivables: This ratio is very low, 7 days in 2003, which is well below the industry ratio of 19.1 days. Even though the trend is increasing but it is still a positive sign for the company and it shows that probably Lawsons has few credit sales. Age of inventory: This ratio measures how quickly the merchandise moves through the business. Lawsons’s age of inventory is almost six times of the industry average of 25.7 days which is a major issue that needs to be addressed. Higher inventory levels tie up larger amount of the company’s money. The company should try to decrease its age of inventory and the new inventory control system should be considered carefully. Age of payables: It has increased from 55 days to 154 days. Due to the liquidity issues, it is hard for the company to pay its purchases quickly. The company is depending too much on its trade credit. Stability Net worth/total assets: The trend is downward. The industry ratio is 61.5%, which is much higher than Lawsons. It may cause difficulty in raising additional capital and a danger of encouraging irresponsibility by the owners and of leaving inadequate protection for the company’s creditors. Lawsons Industry Average A = L + SE A = L + SE 100 = 98.6 +1.4 100 = 38.5 + 61.5 Interest coverage: It hasShow MoreRelatedThe Culture Of White Cap958 Words   |  4 Pagesemployees, longstanding traditions of job security, liberal benefits, and paternalistic management. This culture had been maintained and molded by the White family for more than 50 years. Change would most likely not be welcomed without resistance. Bob White’s successor was Art Lawson. Lawson maintained White’s longstanding culture after his retirement. Macro Micro problems involve the internal workings and the management of the company. 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