Surecut Shears Inc.

616 Words3 Pages
____________________________________________________________ SureCut Shears, Inc. ___________________________________________________________ Executive Summary The case is about estimating fund requirements for short term sources of finance. In June 1995, Mr. Fisher, treasurer of SureCut Shears arranged a line of credit of $3.5 million with the Hudson National Bank to cover the seasonal sales peak. After going with the analysis, much of these funds were used to fund the capital modernication program. Facing the declining sales, SureCut is facing difficulty in paying its short term loan obligations to Hudson National Bank. After thorough analysis, the need for short term fund requirements should not be used in capital expenses since the cash needed to repay the short term fund requirements comes from the sales of inventory which was the intention of the additional cash to stock up more inventory. Proper utilization of funds is a must for SureCut to be able to manage its payables to its business partners. Case Context SureCut Shears, Inc. manufactures a complete line of household scissors and industrial shears. Their products are distributed through wholesalers to specialty, hardware and department stores around the country. In June 1995, Mr. Fisher, treasurer of SureCut Shears arranged a line of credit of $3.5 million with the Hudson National Bank to cover requirements for the fall anticipating that the loan would be fully paid off by December of the same year. In September 2005, Mr. Fisher called Mr. Stewart of Hudson National Bank to inform him that the company would need an additional $350,000 to cover peak seasonal needs. In January 1996, there was a decrease in sales demand. In April 1996, Mr. Fisher called Mr. Stewart to tell him that SureCut Shears would not probably be able repay its outstanding short-term loan of $1.14 million in June.

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