John Taylor, CFO of CiM Corporation and certified management accountant, is confident about the company's financial position, citing steady sales and profitability growth. He has implemented a policy to improve liquidity by deferring vendor payments, reducing the cash conversion cycle. Taylor is preparing to present financial results to the board and has enlisted Karla Hester to work on the numbers. However, a conversation with supplier owner Sheila Roberts led to cashflow issues and urgent payment needs.

CiM has increased its vendor payment policy to $85$ days, a $49-$day increase from $45$ days, to improve cash flow, reduce net working capital, and preserve operational cash flow. The policy also allows vendors to receive working capital financing from DJX Financial without renegotiating agreements. CiM plans to pay bills more slowly and collaborate with DJX Financial for improved cash flow timing.

CiM's initial policy discussion was minimal, and vendors were not well$-$received, leading to supply chain and quality issues. Two of Karla$$s colleagues left CiM due to stress and a negative work environment. CiM's CFO was enthusiastic about the financing solution through DJX Financial, but vendors were not appreciative. Small vendors struggled to get credit approval, and those granted were surprised by high costs. Many vendors were angry about the policy, which contradicted their agreements signed in good faith.

Karla is considering her future and career prospects. However, the company's new payment policy is causing tension among local business owners and generating negative customer feedback. At a meeting of the local chapter of IMA, Karla met with John, the CFO, who is also a certified management accountant. Karla is concerned about John's awareness of the personal and organizational implications of the new policy, as he is also a certified management accountant.

The case revolves around John Taylor's aggressive cash management policies, focusing on optimizing turnover for customer receivables and inventory, and implementing a vendor payment deferral policy, have led to negative consequences, including affecting vendor relationships, causing employee stress, and generating negative customer feedback, despite his strategic focus on improving company liquidity.

Questions:

$1.$Identify the main root of the problem?

$2.$ Solution to the main root problem?

$2.$ Analyze the given report of income statement, balance sheet and liquidity ratio?

$3.$To propose a balanced approach that balances financial goals with ethical considerations to mitigate unintended vendor payment policy consequences while maintaining the company's financial health considering the given report as attached.