Business Leadership

Survive the Year

Submitted By: Nidhish Agrawal (10319) Section 3

Facts: Company is facing tough times in light of downturn in the construction industry. The collectability of material receivable from Ender Corporation is in doubt Adjusting the allowance for the Enders receivable will weaken the balance sheet position of the company which will hinder chances of getting crucial bank loan for the company.

Main Issues: Whether to adjust the receivables from Ender Corporation or not on account of their recent conditions

Supplementary Issues: If they adjust the allowances for the receivables they will face problem in getting the loan from the bank. What will be the implication in case they do not account for allowances in receivables and conceal the situation of Ender corporation

Options: To conceal the situation of Enders corporation and do not provide the allowances for the receivables To adjust the allowances for receivables from Enders corporation

Decisions: My decision is to conceal the Enders corporation situation and not to adjust any allowances for the receivables from Enders Corporation.

Rational Behind the Decision: It is expected that the industry will grow after the current downturn. Also according to Chris the company will not be able to survive the situation if the bank loan is not approved and company is already facing a tough situation because of the downturn. And there is high chance that company will not be able to get the loan with the further weakening of the balance sheet because of the adjustment in receivables from Enders Corporation. This may result in the bankruptcy of the company by next year. So concealing the fact would be the more appropriate option for the company in present situation.

Prime Owner: Prime owner should be the CEO of the company as the decisions will be taken with his consensus and he would play the major role in finalizing the decisions.

Most Effected: Company would be most affected with the decision and the outcome of the decision. A wrong decision may affect the future survival as well as the credibility of the company. This would also impact the future of the Robin (CEO) and Chris (controllers) of the company.

Fall Back Strategy: Fall back strategy would be to seek for alternative approaches to strengthen the balance sheet of the company to get the bank loan or the alternative sources of funds in case the bank would not approve the loan for the company.