Sengupta Fibres, Ltd.

Darden Business Publishing Cases

ISSN: 2474-7890

Publication date: 20 January 2017

Abstract

In January 1990, the chief executive of this small yarn-production company must resolve a surprising cash shortage. The tasks for the student are to evaluate the causes of this shortage (using a complete base case forecast given in the case) and then to assess the usefulness of various possible remedies suggested by company managers. In essence, the company is unable to liquidate a seasonal working-capital loan for the requisite 30 days each year. This situation arises from two classic causes: secular growth of the company, and declining profitability. Possible remedies include reducing finished-goods inventory through more efficient transportation and warehousing, reducing credit terms to customers, just-in-time (JIT) raw-materials supply, and switching from seasonal to level production. This case provides a thorough exercise of working-capital analysis and concepts.

Keywords

Citation

Bruner, R. and Pham, T. (2017), "Sengupta Fibres, Ltd.", Darden Business Publishing Cases. https://doi.org/10.1108/case.darden.2016.000275

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Publisher

:

University of Virginia Darden School Foundation

Copyright © 1990 by the University of Virginia Darden School Foundation, Charlottesville, VA. All rights reserved.

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