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Your mission is to apply tools of financial analysis to determine the major causes of Grant’s financial problems. If you had been performing this analysis contemporaneously with the release of publicly reported information, when would you have become skeptical of the ability of Grant to continue as a viable going concern? One of the major causes of Grant’s financial problem, Is regarding the credit extension and credit terms.

These credit terms let consumers only pay $1 for their minimum monthly payments, regardless of the total amount of purchases. This caused Grant to obtain a short-term loan of $600 million to cover the credit of consumer purchases. Another major cause of Grant’s financial problem, would be the new product line that he wanted to Implement and It being eliminated from the stores. In addition, numerous stores were also closing which diminished their revenues and chances In reaping the benefit of opening new stores to accommodate the middle-income consumers.

From the publicly reported Information, I would have become skeptical of the ability f Grant to continue as a viable concern when he Implemented the new strategy of credit extension. The new strategy put W. T. Grant In a position to procure finances from several different banks to absorb the credit from purchases. With the short- term loan not being significant enough to overcome those events, the company had to close a number of stores that were not profitable. The short-term debt Increased almost $20,000 from 1966 to 1967 because of the credit extension to customers and not collecting accounts receivable.

Even with the customer Installment receivable Increasing from 1967 to 1968 by almost $30,000, the credit Limit for customer purchases were not being paid fully so the company had to take out more short-term loans. They also had to pull the strategy of Introducing a new product line, which Included furniture and private-brand appliances. The closing of numerous stores would also bring a substantial loss of $177 million and a decreases In credit operations accounting. Another problem of Grant continuing as a viable going concern would be the ability for Grant to pay for merchandise.

Having a problem tit paying for merchandise will also show a tremendous loss In sales and revenue. This can be seen In the Income statement from sales Increasing, but the net Income decreasing every year since 1972 and having a negative value of 177,340 In year 1975. The retained earnings can also show that In year 1975 the decrease was over $200,000. Research methods By bladderwort One of the major causes of Grant’s financial problem, is regarding the credit the new product line that he wanted to implement and it being eliminated from the revenues and chances in reaping the benefit of opening new stores to accommodate

From the publicly reported information, I would have become skeptical of the ability of Grant to continue as a viable concern when he implemented the new strategy of credit extension. The new strategy put W. T. Grant in a position to procure finances to close a number of stores that were not profitable. The short-term debt increased not collecting accounts receivable. Even with the customer installment receivable increasing from 1967 to 1968 by almost $30,000, the credit limit for customer loans. They also had to pull the strategy of introducing a new product line, which included furniture and private-brand appliances.

The closing of numerous stores would also bring a substantial loss of $177 million and a decreases in credit concern would be the ability for Grant to pay for merchandise. Having a problem with paying for merchandise will also show a tremendous loss in sales and revenue. This can be seen in the income statement from sales increasing, but the net income decreasing every year since 1972 and having a negative value of 177,340 in year 1975. The retained earnings can also show that in year 1975 the decrease was over