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MEMO RE CLARKSON LUMBER

TO: John Doe
President, Northrup National Bank
FROM: George Dodge
Loans Officer, Northrup National Bank

Clarkson Lumber Company is owned and operated by the hardworking, 49-year-old Mr. Clarkson. It has low operating expenses, a small staff, and strong management. The overall impression is one of a conservative, efficient operation. Clarkson himself leads a frugal lifestyle with little personal debt.

Clarkson Lumber is a company experiencing rapid growth but with a constant cash flow crisis. This is not an unusual confluence, but it does require some financial decision-making. Their current state of under financing makes a number of their ratios look poor.

There are several reasons for the cash flow problems at Clarkson Lumber. One is Mr. Clarkson's decision in 1994 to buy out his partner Mr. Holtz. The note had 4 semi-annual installments of $50,000 beginning June 30, 1995 with an 11% interest rate. Clarkson......

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Approximate Word Count: 931
Approximate Pages: 4 (250 words per double-spaced page)

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