However, the company may have been slow to react resulting in an accumulation of excess inventory and related inability to repay its bank loan prior to the next seasonal increase in demand.
For this reason we do not think this was a reasonable assumption to take. Comparing the Pro Forma Income Statement with the effectively verified Income Statement for the period of July 95 till June 96, the first of the cause and effect relations that we can establish to explain the incapacity of SureCut Shears to repay its bank loan on March 31 is the Retail downturn, and consequent decrease on sales, which end up to register values Directly related to that is also the verification of a higher lag sales collection period than the predicted from the 45 estimated days to In the other hand, that was not actually compensated with an increase of the payment period, which in fact almost maintained equal to the predicted, in the order of 30 days.
We computed both for every month, by multiplying the number of days 30 in average respectively by accounts receivable and accounts payable divided by, once again respectively, sales and purchases, and from there we calculated the average until March.
Consequence of the sales decrease was, by its turn, the increase of the inventories, again comparing to the advanced by the Pro Forma Balance Sheet, which shows days of average permanence of inventories in storage before being sold, against the real performed average of days.
Although financial conditions had become worse during the analysis period, with the decline on the sales and all the referred consequences for the company, we cannot say that it has crossed a sustainability mark, since it still presents a positive current ratio in March: Therefore, one can say that Mr.
Stewart has no motivations to be concerned with the loans due by SureCut Shears, Inc. We are clearly facing different kinds of problem. If, in the first case, the Clarkson Lumber, Co. Joao Pinto Choose Type of service.I searched for fiskars trimmer on metin2sell.com and wow did I strike gold.
I love it. Download Limit Exceeded You have exceeded your daily download allowance. A bank loan officer must determine whether to waive convenants and extend terms on a line of credit granted to SureCut Shears. At issue is whether the inability of SureCut to pay down its line of credit is due to a temporary cyclical downturn or other long-term financial problems.
July March r figures in thousands) Oct $ $ $ y Subsidiary Data (FIFO) Oct 31 $ Nov 30 $ Dec 31 $ Jan 31 $ Page 9 Feb 28 $ Mar 31 $ $ $ $ $ $ $ $ $ $1.
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Running Head: Sure Cut Shears case study. Name. Institution.
Date. Describe Sure Cut Shears in terms of its market, competitive and operating characteristics? How risky is Sure Cut in operating and competitive terms?
The financial condition of SureCut Company has not worsened sufficiently to cause Mr. Stewart.