Southern Supply Inc.

The family who founded and operates Southern Supply Inc. is headed by a strong$-$willed and very astute octogenarian. The company has no succession plan for replacing him in the event of his injury, death, or incapacitation.

How would you expect this situation to affect the assessment of Southern$$s financial condition and performance?

Although nonquantitative factors may be relevant to a company$$s financial evaluation in general terms, the details of this specific situation are not relevant to the firm$$s financial condition or performance.

Because the company is family owned, succession planning should not be an issue, and the family can pull together to run the organization when the leader dies. This should ensure that the company$$s expected future performance is maintained.

The absence of a succession plan for Southern$$s leader and driving force can place the organization in serious jeopardy. A firm$$s financial condition and performance are the result of decisions made by the firm$$s leadership and staff.