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A bank account manager is reviewing the risk and credit facility for a specialty food store operator. The case permits a size-up of the company and provides detailed information to decide the loan rate that should be charged.

A sole proprietor, with depleted savings, has requested both an operating loan as well as a line of credit. The operating loan will be used to retire his 'run-away' trade debts and the line of credit to service his cash-tight months.

Describes the development and terms of the largest leveraged buyout up to the date of the case. The main problem is to value the positions of the various participants: lenders, equity holders, investment bankers, and management. This is an abridged version of an earlier case by D.W. Mullins, Jr.

A loan officer must decide whether to lend $8 million to a rapidly growing high technology company. The company has had a series of relationships with three other banks. Reports from loan officers at these banks are mixed and raise questions as to the ease with which a relationship would proceed. The full range of issues must be considered in evaluating the credit worthiness (character, collateral, capacity, conditions, pricing). The loan officer must also determine how much weight to place on a comfort letter from a major pharmaceutical firm.

Spreadsheet Supplement for case 287028.

Following his successful turnaround of WTXX, Waterbury, Mike Finkelstein joined Odyssey Partners with a mandate to build a communications company. From 1982-1985, he acquired three more stations, financing each as an independent partnership. However, increasing competition has caused some of his stations to experience cash shortfalls. Finkelstein must decide whether to sell the stations, hold and finance them out of Odyssey Partners capital, or incorporate them into a single company with a new financial structure based on zero coupon bonds.

Spreadsheet Supplement for case 286109

A credit analyst for a furniture manufacturer is confronted with two customers who have exceeded their credit limits. The financial performance of each has been weak, and one of the customers has a highly leveraged balance sheet. Industry conditions are weak; the manufacturer apparently has excess capacity; and the credit analyst is caught between the conflicting demands of the sales managers and the credit manager. The case provides an opportunity for ratio analysis.

A senior loan officer is reviewing the recent performance of a company that has failed to repay its loan as scheduled. The failure results from a cyclical downturn in sales, coupled with a lag in cutting back production. Inventory risk is minimal. This case is an updated version of Cutrite Shears.

Spreadsheet Supplement for case 286021

Spreadsheet Supplement for case 286122.

The Wilson Lumber Co. is faced with a need for increased bank financing due to its rapid sales growth and low profitability. Students must determine the reasons for the rising bank borrowing, estimate the amount of borrowing needed, and assess the attractiveness of the loan to the bank. A rewritten version of an earlier case by J.K. Butters.

Entrepreneurs should compile a financial forecast that includes three elements: an income statement, a balance sheet, and a cash flow statement. Forecasts should look ahead five years and include three scenarios: a most likely, a most pessimistic, and a most optimistic. Key estimates for putting the income statement together are sales, costs of goods sold, general and administrative expenses, and selling expenses. Key estimates needed for the balance sheet are accounts receivable, inventory, and the debt-equity ratio. These estimates enable one to complete the cash flow statement.

Penney's assistant treasurer was considering various capital markets issues to finance store modernizations. This case provides the financing terms available to Penney for domestic, current, and zero coupon debt. Eurodollar debt, and nondollar SFr and Yen issues hedged and swapped back to dollar liabilities. Also, Penney is considering using interest rate futures, options, and options on futures to hedge a forthcoming debt issue.

Develops a simple option pricing model which provides an insight into the foundations of the Black and Scholes model. The Black and Scholes model is next introduced and its relationship to the simple option pricing model discussed. Last, the problem of pricing debt options is addressed in the appendix and a debt option model is presented. To be read with Introduction to Options.

Consists of a series of four brief descriptions of the use of financial futures as hedging vehicles: a savings and loan hedging the rollover of three-month money market certificates with T-bill futures, a corporate debt issuer hedging the cost of a future debt issue with T-bond futures, an equity investor hedging a decline in the market, and an example of a company with a natural interest rate hedge on its balance sheet. The examples describe the details of T-bill, T-bond, and S&P 500 stock index futures. Issues addressed include variation margin and basis risk (due to differences in the securities underlying the cash and futures positions, changes in the carry, etc.).

Designed to help students develop an understanding of option contracts and markets.

Presents a description of international equity markets, including comparisons of the U.S., Japanese, and British markets and recent trends toward deregulation of these markets. The decision focus of the case is on the initial public offerings of British Telecommunications stock. The offering was part of a broader privatization program begun by the U.K. government in 1981. The issue was offered simultaneously in four markets: London, New York, Tokyo, and Toronto. The case is written from the perspective of Morgan Stanley, underwriters of the U.S. offering, and focuses on the issues of pricing foreign equities, differences in underwriting practices and securities regulations across markets, structuring an installment sale of equity, and hedging foreign exchange risk on a purchase of foreign equities.

Intended to establish understanding of financial futures.

Acquisitions continue to be an important method of strategic redirection and renewal. But many companies experience disappointing results. Research suggests that an important source of success and failure in acquisitions lies in three factors: the involvement of specialists and analysts with independent goals and multiple, fragmented views of the agreement; premature closure and limited consideration of integration issues; and an inability to resolve important areas of ambiguity before an agreement is completed.