Triple A an office mart sells a complete line of office equipment, furniture and supplies. Susan Burke is the current president and CEO and she founded the company with her college roommate Virginia Best in 1978. The roommates opened the profitable company only after a year of their graduation. Virginia Best had other interest in life so she parted way from her partner only after three years of participation for an overseas venture. Burke acquired interest of Best after her departure to become the sole owner of the company. With high demand for personal computer furniture, Triple A experienced excellent growth in revenue and earnings. In turn, the firm had issued no common stock or long term debt, and a second store was opened in 1992 with no long term financing. Triple A benefited from the strong local service economy and a nearby college stated the local GNP was increasing from 8-10 percent. Burke wanted the company to grow with regional growth and effective operation of her company’s operation.
Over the last few years, the company is facing problems in the financial area. The problems are listed below.
• There was an increase in inventory and bank borrowing.
• Cause for concern on the part of the company management.
• Prices from the suppliers had risen and the effect of this upon profitability and the general operation of the business.
• It was impossible to develop a strong relationship with the suppliers because the firm carried a wide range of office equipment and supplies.
• The inventory was keep increasing every