Financial position Essay

1. One of the apparent reasons for the failure to pay come to the debts by the re collectable debt is the continuous decline of the gross revenue over the period of time collectible(p) to overall sick performance of the industry. However, on the other hand, it is too irresponsible to understand that the riotous has non been able to accurately forecast its cash in in flows as accurately as possible because there were not completely frequent requests for revision of the funds required but also caller-out was undertaking modernization in times where gross revenue were declining.Supporting the massive term as well as short term quittance of bank loans largely depend upon the ability of a company to leave sales and cash flows and in this case it has completely failed to achieve its targeted sales figures which essentially force the firm to default on its payments on the due date. Apart from some seasonal and industry wide factors, company has also not been able to accur ately forecast its financing needs.Though the sales declined but the forecasts based on which the debt was obtained did not included any externalities which could let basically hampered the ability of the firm to repay its debts on time. It is also grave to understand that one of the main reasons behind the failure to pay off the debts on time is the inability of the management of the firm to ill intent at the wrong time as due to the seasonal temper of the fear, they were expecting consistent and diachronic results til now it did not turned up to be right.2. Mr. Fischer was probably not been able to forecast the correct repayment of the loans as he based his forecasts on the historical trends and the companys seasonal needs for the external financing. It was because of this reason that he forecasted zero banks loan payable during the period from Dec 1995 to May 1996. This assumption was correct if we observe it from the historical perspectives however as it lacked the inclu sion of risk based assessment of what whitethorn go wrong i. e.as in this case, the companys sales were consistently forecasted however they declined against the expectations. Such decline in sales thus has put pressures on the cash flow position of the firm which basically forced the firm to not been able to pay its debts on time. It is also important to note that overhead forecasted at constant rates however they have shown greater volatility in actual that basically rock-bottom the profitability of the firm as well as straining the cash flows of the firm as more funds were being diverted in paying off higher overhead and other expenses.Further, the assumption of producing at an even rate was also flawed specially considering the fact that the business has the seasonal demand patterns therefore assuming such production patterns whitethorn be gross mismanagement of the firms resources. 3. Overall, the firms financial position has not worsened as it is because some external factor s which seem to be of short term nature and company underside easily overcome once the seasonal impacts on the business decline. Further, firms working capital management seems to have worsened which may be the actual cause of concern as there is not only an increase in inventory but in receivables also.