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Lawsons

In: Business and Management

Submitted By bmdubya67
Words 252
Pages 2
Executive Summary
Due to large trade debt and interest penalties a general merchandising retailer is experiencing difficulties in repaying such debt. Analysis of the store Lawsons showed that currently the store cannot pay current liabilities when using an Acid Test ratio that was calculated to be .069:1 and when inventory was included it showed a Current Ratio of 1.08:1.
When looking at projections for Lawsons it showed that issues were not occurring among operational aspects of the store. Future sales were shown to increase and previous years showed net earnings in positive numbers before Lawsons borrowed money at interest rates that were too high for them to support a successful business.
Giving a loan to Paul Mackay, owner of the store, would allow for Lawsons to reduce interest rates while moving some current liabilities to a long-term bank loan. Paul Mackay has been an active member of the community as well as a hard worker at Lawsons. He has shown that the store is dedicated towards low and middle income families. This has allowed him to build a social relationship with the community increasing amount of “loyal customers”.
In conclusion, the fact that Lawsons is run by an impeccable and community driven man as well as being able to generate profit, if not for the trade debt accumulated, within the store a loan of $194,000 should be given to Paul Mackay with confidence that the stores long-term debt paying ability will be more than sufficient.

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