Morley Industries, Inc.

This case involves the preparation of a cash budget and pro forma statements, together with sensibility analyses under changing assumptions. The company has seasonal demand for its product, but manufacturers on essentially a level basis year around. As a result there are build ups in both receivables and inventories. An assessment of the short-term financing arrangement is required, because the company previously financed long-term needs with a seasonal bank line of credit. The trade-off between funds requirements and the type of financing is embraced in the case discussion.