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Case Analysis and Teaching Plan
1. What should the CFO do to meet urgent liabilities?
Students should contribute to the discussion here. If students
have not read the case, listing issues
allows them to catch up and hence be participative in the discussion. The students will typically
advocate the two quite obvious solutions:
1. Request the Bank to give additional time to increase liquidity.
2. Communicate with the staff and ask them to be patient by promising to promptly pay all salary debts.
The instructor should support these possible solutions. However, you should
tell the students that such
approaches do not always work and do not provide long-term effect. For example, if the Bank has any
financial difficulties itself, it may simply reject the Company’s request. Then you could ask the
students to name a few other options when the above two offers do not work.
2. Why does the Bank require the Current Ratio to be greater than 1.5?
The instructor could focus the students' attention to the Current Ratio’s formula and ask students:
"
What do you think, why does the Bank require the Current Ratio to be greater than 1.5?" This
question allows you to elaborate on the problem of the ratio’s optimal value and its essence.
In explaining of the Current Ratio’s role, it would be useful to write on the blackboard the formula as
shown in
Figure 1 in order to help the students visualize it:
Достарыңызбен бөлісу: