Summit of distributors was in danger of a breach of the loan agreement due to slow economic activity and expected losses and faced with a choice. Changing the method of inventory valuation FIFO to LIFO to avoid a default, but will require higher tax revenues in the future. Not changing could mean a default on loan covenants renegotiation on less favorable interest rates, or possible bankruptcy. "Hide
by William J. Bruns, Jr., Amy P. Hutton, Marc H. Zablatsky Source: Harvard Business School 10 pages. Publication Date: September 30, 1992. Prod. #: 193053-PDF-ENG
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