Day 86 in MIT Sloan Fellows Class 2023, Financial Management 6, Summary of business cases and financial theories - 1

1. Gilbert
   • Concepts
     • Cash Flow Management
     • Proforma analysis
     • Source and Use
   • Key findings
     • Operation/Product strategy and Financial strategy should be consistent
     • Minimize Days A/R, Maximize Days A/P
     • Diagnose firm health with operation ratios and financial ratios
2. PlayTime Toys
   • Concepts
     • Seasonality
     • Tax payment and estimation
     • Effects from operational strategy transformation(level-production)
   • Key findings
     • Accrued Taxes
     • Note Payable - Bank would be Plug.
3. SureCut Shears Inc
   • Concepts
     • Repay failure and forecast failure
     • Gap between actual and forecast
     • Inventory management
   • Key findings
     • Combine Forecaset and Acutal + Source and Use(Look at shortfall)
     • Lower sales, constant labor, higher purchases consequences surge of inventories
     • Timing of response matters. Too slow response is management failure.
4. Massey Ferguson
   • Concepts
     • Sustainable growth rate
     • DuPont Formula(NI/Sales*Sales/Assets*Assets/NW)
     • Product strategy and debt structure
     • Downward company's option
       • Raise cash 
         • Issue debt
         • Issue equity
         • Sell assets
       • Merge with cash rich company
       • Liquidate
       • Restructure liabilities
         • Out of court
         • In banktrupsy/bailout
   • Key findings
     • High risk and high leverage is a bad sign. Low product risk would allow you to borrow more.
     • Borrowing structure also matters. Simple and one source would be ideal. 
     • Downward death spiral: losses→Short-term borrowing→lower ratings→higher interest rates→More losses