QUESTION:

1.Why would it be difficult for Massey-Ferguson to conduct an equity issue to pay down its debt?

Exhibit 2 Net sales Massey-Ferguson, 1980 Consolidated Statements of Income, 19781980 (U.S.$ millions) Years Ended October 31 Costs and expenses Cost ot goods sold, translated at average exchange rates for the year Effect of foreign currency exchange rate changesa Marketing, general and administrative Engineering and product development Interest on long-term debt Other interest expense Interest income Exchange adjustments Minority interest Miscellaneous income Total costs and expenses Profit (loss) before items shown below provision for reorganization expense Income tax recovery Equity in net income ot finance subsidiaries Equity in net income of associate companies Income (loss) from continuing operations Loss from discontinued operations Extraordinary item Net income (loss) Unfavorable (favorable) impact on continuing operations of exchange adjustments and foreign currency exchange rate changes in cost of goods sold 1980 33,132.1 2,568.5 7.7 2,576.2 404.7 59.7 71.0 229.9 (42.0) 49.9 0.2 (13.5) 3,336.1 (204.0) (28.5) 10.1 22.7 (199.7) (25.5) (225.2) S57.6 1979 $2,973.0 2,381.8 2,400.4 351.9 58.2 75.7 128.8 (40.3) (24.9) 1.4 (10.3) 2,940.9 32.1 (95.0) 16.6 4.6 (35.4) (23.0) 95.4 37.0 S(6.3) 1978 $2,925.5 2,371.2 2,371.2 372.0 66.0 78.6 108.0b 90.9 (0.8) (10.6) 3,075.3 (149.8) (116.0) (11.8) 16.3 4.6 (256.7) $(256.7) aThis item is the difference between cost of goods sold translated to US. dollars at average exchange rates and such costs translated at historical rates. b Amount shown is net of interest income.