Introduction to Financial Management & Emily James Case Study - Accounting Assignment Help

Assignment Task

Task

Learning Outcomes (SLO) Questions
1-Identify the basic concepts of financial management. 
2-Interpret the financial results for financing decision making.

Individual Assignment Question:

Prince Consolidated Corporation Emily James, a credit officer at Prince Consolidated Corporation (PCC), had heard rumours that South Manufacturing was in deep trouble. She is responsible for credits to South of approximately $1 million. South always pays on time and is current on outstanding payables to PCC. South, in fact, uses PCC as a credit reference with other suppliers. Nevertheless, Emily decided a visit to South was in order. Emily James and Roy Peter, South’s treasurer, had developed a good working relationship and went to lunch during Emily’s visit. After several drinks, Roy Peter said: “Emily, we’re fried. I must tell you, our financial statements aren’t fraudulent, but they don’t paint the full picture. Not only are we not doing well, but we’ve been talking to bankruptcy attorneys. If things don’t turn around soon, we may file before the end of next quarter. We plan to continue paying PCC promptly because we need all the trade credit we can get. In fact, supplier credit is giving us a chance to come back. Without it, we’d be under right now; with it, we might just squeak by. Frankly, if there is any way you can encourage your competition to supply us--do it. I’ve told Purchasing to place a large order with Basic Products instead of PCC. If Basic gives us credit, we can pay PCC in full before we file. If we make it through this, PCC will get our business back, but I don’t want your career to suffer because of our problems now.” Emily was shaken by Roy’s comments. She knew that if South’s credits went bad, she would lose her annual bonus--25 percent of her compensation--and probably any chance for promotion. At worst, she could be fired. Shortly after her visit with Roy Peter, she received a call from her friend in the Credit Department at Basic Products, Xavier. Suppliers often share credit information on common customers, so it was not surprising that Xavier called. PCC’s policy is to provide what they refer to as the “prompt payment history” for the customer. This includes recent high credit balances, any past-due balance, and how promptly customer payments had been received. After Emily provided South’s prompt payment history--which in fact had been good--Xavier was enthusiastic. “I'm glad to hear that,” he said. “We just got a huge order to supply them through the end of the year. There are a lot of rumours floating around, but if you’re getting paid promptly on that much, I guess it's OK.” Emily broke in at that moment. "Can you hold the line, Xavier? There’s someone at my door.” She put Xavier on hold, her mind racing. She could suggest that Xavier investigate other public information sources or contact other suppliers about credit histories with South. That would be within acceptable company practice and almost certainly would send up a red flag for Xavier. But who else could supply enough credit to South for PCC to get its money out? She couldn’t keep Xavier on hold forever, she pressed the flashing button on her telephone-- “Xavie

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