The Company

After looking Mark Cartwright's Company it seems that about 55% of its annual sales are made from April through September the company has seen rapid sales growth in recent years and it is anticipating a further substantial increase in sales this coming year. One of the risks that the company has is they are short on capital. Cartwright Lumber Company was founded in 1994, the bussines was located in a growing suburb in the Pacific Northwest and operated in retail distribution of lumber product for example plywood,moldings and sash and door products. This bring uncertainty if something was to go wrong due to lack of capital the company would not have enough capital to cover its day to day operations. I appears that Mr. Cartwright and his wife are paying their home that cost $130,000 in 1992 and was mortgaged for $90,000, this is an indication and creates a higher risk to the bank because the customer does not have his home paid in full to be used as collateral. Research show Mr. Cartwright has a life insurance, this does not guerantee or provide any benefit to the bank because settlement will be provided to spouse. Annual sales of $1,697,000 in 2001, $2,013,000 in 2002, and $2,694,000 in 2003 of net income. The company 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.

I have been giving the task to analyze the company's performance in which I would review the firms accounting records to determine their potential risk to Northrop Bank.