My question is : I think it is important for the leaders to have a financial background or at least have had experience working with budgets and profit and loss statements. To have the insight of the finances give the leaders the ability to make better sound decisions. If the leaders would have had that insight, they would not have added additional employees when they could not afford it. They also would have made a decision with regard to decreasing the operating expenses. What things or training could be implemented to help the leadership team make the best decisions based on the finances?

Reference to answer is below article and its reference's:

Introduction

Unfortunately, a lack of capital is a leading cause of business failure. When there is a more significant outflow of funds from a corporation than inflow, this is known as a cash flow deficit. This could lead to problems meeting payroll or other operational expenses in a cash flow shortfall. A crisis develops when company executives are unprepared to handle a cash flow deficit. It would help if you had a plan B in place in case of a cash flow problem that will keep your business from failing before its time (king, n.d.).

Background of Atlantic Lumber Traders case study

Atlantic Lumber Trader, which was established in Saint John, New Brunswick, in 1983, and dealt in the wholesale trade of timber across Atlantic Canada, Quebec, Ontario, and the United States, encountered some of these issues, and we'll talk about them in the case study (Roberts and Hendry, 1991). Sales within the Atlantic county region accounted for 80% of the firm's total (Roberts and Hendry, 1991). The company was successful for a while and turned a profit, but in 1988, it ran into some serious problems (Roberts & Hendry, 1991). These losses prompted widespread alarm, calling for immediate action to stabilize the company and secure its survival, which we will explain.

Identify the real root problem of this case.

At the end of 1988, the company's financial filings showed revenue of $17 million US. Nonetheless, operating losses came in at around $220,000, or $174,000 net (Roberts & Hendry, 1991). Lenders and banks were already understandably nervous following four consecutive years of earnings, and these losses suggest that management failed to exercise adequate cost control. Because of the firm's solid financial track record, the bank had decided to increase the company's credit limit. Furthermore, the debt-to-equity ratio was 17:1 at the end of 1988, which will significantly impact the company's efforts to revive the economy. This demonstrates the firm's lack of financial strength and inability to satisfy its debt obligations; the ratio would have improved with the injection of the bank loan, but not as much as was needed, which would be 4:1 (Roberts and Hendry, 1991).

Diagnose the fundamental cause(s)

The owners were slow to take action because they lacked immediate and direct control over expenses, costs, and sales regulations. The sum was necessary to fulfill consumer purchase orders and expand the business. Due to the disparity in payment conditions between suppliers and customers, the company found itself in a lurch. When the previous lessee attempted to boost productivity by hiring more people, it ended up draining earnings to pay for those new faces instead (Roberts & Hendry,1991). And the company's prior manager's risky attempts to capitalize on fluctuating market prices led to a considerable loss and an enormous stockpile (Roberts &Hendry, 1991).

Possible alternatives solutions

Possible alternatives include:

• Discussing ways to increase the company's financial solvency by increasing revenues as a result of increasing the number of customers and sales,
• Obtaining appropriate financing with easy terms and a more extended repayment period, and
• Reducing operating expenses by lowering employees and increasing production, in addition to the importance of reducing inventory and developing accounting systems to control the accounting work cycle, reducing inventory, and designing accounting systems to handle the accounting work cycle.

Evaluate plan of action (decision/implementation)

Actions taken by Gail Hall appeared well planned towards the end of the first quarter when favorable outcomes became evident. On the other hand, the company's financial soundness and standing may be improved if he invests the time and effort to craft comprehensive, well-thought-out plans and strategies. For instance, instead of the existing balances, an acceptable and optimistic ratio would result from the corporation improving its profitability and reducing its liabilities. An experienced administrative and financial team would also help contribute to the plan's implementation, making good decisions for the firm and cutting costs.

The importance and relevance of the case to the study of business

Lack of cash flow makes it difficult for a business to pay basic expenses, plan for the future, and expand (Cole-Ingait, n.d.). Therefore, owners, managers, and decision-makers should be familiar with financial ratios and their inputs to make sound decisions and plans for the end of the business.

Conclusion

Several reasons a business owner or manager would benefit from having insight into the company's performance. First, they can better steer the company and allocate resources based on accurate information about its financial health. They must discuss the company's financial stability if they want to entice investors or secure finance (Stobierski, 2020).

References

Cole-Ingait, P. (n.d.). Implications of poor cash flow. Small Business - Chron.com.

https://smallbusiness.chron.com/implicationspoor-cash-flow-80661.html

King, S. (n.d.). 7 strategies for surviving a cash flow crisis. Bookkeeping, Accounting & Controllers for Businesses and Nonprofits.

https://www.growthforce.com/blog/7-strategies-for-surviving-a-cash-flow-crisis

Roberts, G.S. & Hendry, L.P. (1991). Atlantic lumber traders. Acadia Institute for Case Studies. Acadia University.

https://my.uopeople.edu/pluginfile.php/1585801/mod_book/chapter/345450/U4%20atlantic_lumber_traders.pdf

Stobierski, T. (2020, June 18). How to determine the financial health of your company | HBS online. Business Insights -Blog.

https://online.hbs.edu/blog/post/how-to-determine-the-financial-health-of-a-company