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Find the maturity of the current loan

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Reference no: EM133172660

In this case, you are introduced to a company, Jackson Automotive, that produces advanced automotive systems for large automobile assemblers located locally. Because of certain unanticipated issues, the company is unable to pay its outstanding debt that is coming due at the end of June 2013, and is seeking a loan. You must evaluate the circumstances leading to this situation-from a managerial and cash flow perspective. I highly encourage you to review the figures provided in the tables, but you are not required to calculate any figures at this point. You can base your answers on the discussion of the figures, and the managerial approach of Jackson president, Larry Edwards, presented in the case text. 

  1. Why can't a profitable company like Jackson repay its loan on time? What major company developments between August 2012 and May 2013 contribute to this situation?
  2. Why does the company need a new loan? How urgent is the need for the additional borrowing?
  3. Why did the company repurchase a substantial fraction of its outstanding common stocks? What's the impact of repurchase on Jackson's financial condition?
  4. Should the bank extend the maturity of the current loan and approve the additional loan? What are the risks associated with the proposed loan?

Reference no: EM133172660

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