Classic Fixtures & Hardware Company is a private based company with limited capital, thus most of the company’s investment based on a loan from Southwest National Bank. The company has been manufacturing and distributing the kitchen and bathroom fixtures and trim, along with lock sets and hardware for doors and windows.
First half of the year did not yield the desired revenue and resulted in higher inventory levels and loan balances. Although, the company maintained the rate of production as forecasted but the sales did not expand as expected, while after the first half the company showed decline in the inventory level with reduction in loan balances till the end.
In 2008, the company showed a red sign in a loan balance that was massively increased beyond expectations and ultimately Classic’s CFO said that the company would not be able to pay off this huge loan until the end of the year.
To evaluate the reasons of the problem and to find the solution of this issue, a meeting was held by the CFO and a senior loan officer from Southwest that could generate the appropriate ways for Classic to overcome this deficit.
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