DeVry University, Keller Graduate School of Management<<MGMT 520<<Atlantic Lumber Traders case study.

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Running head: ATLANTIC LUMBERS TRADERS 1 Atlantic Lumber Traders case study Name Institution Running head: ATLANTIC LUMBERS TRADERS 2 Introduction Atlantic lumber traders was established in 1983... by Gaff Hall and Edward in a bid to wholesale lumber. The primary sales territories were in the Atlantic Provinces, United States, Quebec as well as the Ontario. The company shares were owned by Edward, Gail and David Lawson. In between 1987 and 1988, the performance of the company was very poor. This research paper will discuss the problem facing the company, its causes, possible alternatives as well as the recommendable plan of action (Roberts, 1991). Identification of the problem. The cash balance of the firm was very low despite being the accounting profit was reasonable. In the year 1988, the company encountered a severe loss of $219,666 whereby the cash flow was not sufficient to balance the resulting loss (Roberts, 1991). This lead to the company to seek financial aid from the Maritime Bank which resulted in more debts that were supposed to be catered for. If a Company does not work towards maximizing the shareholder wealth through reinvestments or payment dividend, then the owners may lose confident on the company and will probably sell off their shares. This creates a great impact on the company in the long run and the ultimate phase would be bankruptcy [ CITATION Raj \l 1033 ] Causes Reliance on accounting profits The managers failed to have the knowledge that the performance or the stability of the firm is based on the cash flows and not the accounting accrued profits. The cash flows within a firm are [Show More]

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