Cases in finance

Cases in Finance has been developed to enhance the key concepts of an introductory corporate finance text. The cases in this book present these concepts within a realistic setting, and are accompanied by questions and problems that assist students in applying these concepts to business decision making. These cases are hypothetical: they take place within a believable business setting, yet the numbers always work out neatly to allow students to focus on one issue at a time. Once the calculations are done, students move beyond them via the questions and problems, which introduce a strong element of critical thinking and analysis. Cases in Finance is supported by Teaching Notes which include solutions to each case and how to solve the questions in Excel, and PowerPoint slides that outline the cases and solutions for instructors interested in presenting and discussing the cases in class. (...) When Jay Smith took the job of Assistant to the President, two years ago, things were going rather well at the Signal Cable Company. The company was on an expansionary path and had branched off into the fiber optics business. The prospects looked good and the economy was strong. The threat of competition was not too severe. Due to the expectation of increased demand for fiber optic communications, the company had established two additional manufacturing facilities, and significantly increased its inventory. Signal Cable had quite a run up in profits over the past few years. However, when the accounting statements were prepared for the current year, the results showed a lower profitability. More importantly, there was a severe drop in the cash balance of the company and the stock price had recently fallen from $7 to $5.50 per share. Jay knew that the shareholders would be very concerned and possibly irate. He was also sure that his boss, Joe Mathis would have to come up with some feasible answers and suggestions as to how the liquidity problems could be alleviated. This concern was primarily important since the firm had been expecting to raise some short-term capital in the immediate future. Jay’s expectations were fulfilled when Joe called him up and asked him to prepare a report explaining the financial condition of the firm. Table I and II present the Income statement and Balance Sheet for the recent two years. (...) Andre Pires opened his automobile parts store, Quickfix Auto Parts, in 1997, in a mid-sized city located in the mid-western region of the United States. Having worked for an automobile dealership, first as a technician, and later as the parts department manager, for over 15 years, Andre had learned the many nuances of the fiercely competitive automobile servicing business. He had developed many contacts with dealers and service technicians, which came in real handy when establishing his own retail store.