Balloon mortgage on new manufacturing facility

Assignment Help Financial Management

Reference no: EM131343672

Brockman Guitar Company is in the business of manufacturing top-quality, steel-string folk guitars. In recent years, the company has experienced working capital problems resulting from the procurement of factory equipment, the unanticipated buildup of receivables and inventories, and the payoff of a balloon mortgage on a new manufacturing facility. The founder and president of the company, Barbara Brockman, has attempted to raise cash from various financial institutions, but to no avail because of the company’s poor performance in recent years. In particular, the company’s lead bank, First Financial, is especially concerned about Brockman’s inability to maintain a positive cash position. Barbara came up with what she believes is a good plan: With a more attractive statement of cash flows, the bank might be willing to provide long-term financing. To “window dress” cash flows, the company can sell its accounts receivables to factors and liquidate its raw materials inventories. These rather costly transactions would generate lots of cash. As the chief accountant for Brockman Guitar, it is your job to tell Barbara what you think of her plan.

What are the ethical issues related to Barbara Brockman’s idea?

Reference no: EM131343672

Questions Cloud

Discuss about the passive and active thermography : Describe in your own words (not more than 250 words) the differences between passive and active thermography. List at least 2 typical applications of each technique . A double pane window has an inside temperature of 20C and an outside temperature..

What is the adjusted present value of project : Zoso is a rental car company that is trying to determine whether to add 25 cars to its fleet. The company fully depreciates all its rental cars over six years using the straight-line method. What is the maximum price that the company should be willin..

Are the allocation bases suggested in the case reasonable : Case - Harbor City Electric. Are the allocation bases suggested in the case "reasonable"? If not, how would you change them? Which of the two bases under discussion for the maintenance and repair cost center would you use? Why

Why do you feel that is an important question : Imagine you can interview the presenters and ask one question about financial risks and rewards. What question would you ask? Why do you feel that is an important question?

Balloon mortgage on new manufacturing facility : Brockman Guitar Company is in the business of manufacturing top-quality, steel-string folk guitars. In recent years, the company has experienced working capital problems resulting from the procurement of factory equipment, the unanticipated buildup o..

Find the maximum number of gallons possible : Let a be the number of gallons of color A and let b be the number of gallons of color B. Write the inequalities that describe this situation.

Whereas the debt issued had flotation cost : Goodbye, Inc., recently issued new securities to finance a new TV show. The project cost $13.3 million, and the company paid $655,000 in flotation costs. In addition, the equity issued had a flotation cost of 6.3 percent of the amount raised, whereas..

Why worldwide interbank currency trading involve us dollar : Why does most worldwide interbank currency trading involve the U.S. dollar? Do you believe that the dollar may no longer be considered the international reserve currency? Discuss your reasons.

Orbital and a d orbital on adjacent atoms : Draw diagrams to show the various orientations in which a p orbital and a d orbital on adjacent atoms may form bonding and antibonding molecular orbitals.

User Account

All Pages