In January 2001, the executive director of a small yarn-manufacturing company in India to decide surprising lack of funds. The challenge for students is to assess the causes of the deficit (use complete "base case" forecast given in the case) and to evaluate the usefulness of various possible remedies proposed by managers. In fact, the company is not able to eliminate the seasonal working capital loan for the required 30 days each year. This difficulty arises from two classical reasons: (1) the secular growth of the company, and (2) the decrease in profitability. Possible remedies include inventory reduction through more efficient transport and storage, reducing credit terms to customers with raw materials supplied at exactly the time scale, the transition from seasonal to level production, increase profitability, reduce dividends, and reduced growth in sales.
This Darden study. "Hide
by Robert F. Bruner, Thien T. Pham Source: Darden School of Business 18 pages. Publication Date: January 31, 2002. Prod. #: UV0012-PDF-ENG
Related Case Solutions & Analyses:
3i Group plc: May 2006
Sales Force Training at Arrow Electronics (B)
El Farol
Royal Dutch/Shell: A Shell Game with Oil Reserves–Governance Overhaul after Scandal (B)
Telegraph Media Group: The Newspaper Is Dead, Long Live the… (D), Making It All Worthwhile: Closing the Loop with Advertisers
ALPES S.A: Joint Venture Proposal
North American Financial Corporation (NAF) The MLM Project (A)
Daqi Case Report
Mekong Capital
Maersk Group
