WINNING THE “COLD” WAR. Since the end of World War II, a large number of businesses have devoted the majority of their operations to the development and production of equipment for the U.S. Defense Department. As the 1990s unfolded, political developments in Eastern Europe suggested that the United States might be able to reduce its defense spending significantly, as the threat of an armed conflict in Europe appeared to become more remote.

REQUIRED:

How would a major long-term reduction in defense spending affect the financial statements of firms supplying goods and services to the U.S. Defense Department?