1. Assume you are the CFO of a factory that supplies product to a large well-known retail chain. It is your company's policy, and the general policy of your competitors, to offer product to this retail chain on credit terms of 2/10, net 30. However, it turns out that this large well-known retail chain consistently takes the 2% discount AND pays in 60-days. When pressed, the retail chain responds to all the suppliers that they can choose to either accept the payments as they currently are or lose the business entirely.

• a.Is this ethical?
• b. Should it matter whether this practice is ethical or not?
• c. In answering these questions, describe the impact on a small purchaser versus a large purchaser.
• d. If you were the CFO of the large well-known retail chain, how might you respond?

2. Imagine you have just been hired as the Treasurer and CFO of a new company which has customers in 50 states and is a spin-off from an existing larger company, and as a result of this separation, you need to build a cash management infrastructure from scratch.

• a. Basedonwhatyouknowaboutfinance(aswellasbusinesssense),whatareyourmostsignificantconcernsinthisoveralleffort?

3. As part of your overall cash management system, you might consider discussing a "lockbox" system with your banking partner.

a. What does this system entail and what are its benefits?

4. Some companies use "zero-balance accounts" (sometimes referred to as ZBA's), which is a type of controlled disbursement account.

1. a. What kinds of things are ZBA's generally used for and how do these accounts work?
2. b. What are some of the benefits of ZBA's in the design of your overall system?