Steve Mahre is president and owner of Steves Skis and Bikes, Inc. (SSB), a distributor of a broad range of sporting goods, apparel, and camping equipment. SSB's customers consisted of department stores, discount houses, ski shops and general sporting-goods shops. Steve is very concerned having learned that the companys cash balance had fallen to just about $9.2 thousand dollars as of December 31, 2017. Steve feared that this might not be adequate to support the companys current scale of operations and long term viability. The decline in cash was particularly worrisome to Steve because of difficulties he was currently experiencing with a number of the companys trade suppliers. These suppliers were pressing SSB for prompter payment of their invoices (implying a curtailment of the companys short term credit) which would severely limit prospects for continuing growth. A deeper fear was that some suppliers might cancel the companys exclusive distribution rights for their products. Moreover, with a low cash balance, it would be difficult for SSB to accelerate payments to suppliers. Purchase terms were typically 2/10, net 30, and SSB had often been unable to take advantage of prompt-payment discounts.

Steves first step upon learning of the cash crisis was to call Mr. Carl Grizzly, vice-president of Evergreen Bank. Evergreen had served as SSBs bank of account since the companys founding, and had provided financing for several years in the form of renewable short-term notes.

Steve asked Mr. Grizzly to increase the banks loan to $140,000 from its current level of $40,000, explaining that this would enable him to assuage some of his more strident suppliers, while providing a solid cash reserve for the company. Mr. Grizzly asked when the bank might expect SSB to repay the extra $100,000, and Steve replied that collection of accounts receivable should provide ample funds to reduce the loan to its customary level by the end of the year. Not being at that point entirely up-to-date regarding SSBs performance and financial condition, Mr. Grizzly promised to study the matter and to have an answer to the increased loan request within a few days. He mentioned that because credit conditions were tight, he would have to refer SSBs request to the banks loan review committee.

Your assignment is to consider what you have discovered in the phases above and design and deliver a response.

Determine potential causes of the decline in cash and actions Steve should take to address cash flow issues for Steve's Skis and Bikes, Inc.

• One to two page executive summary of the case including Steves current situation, potential problems and a recommendation on what actions he should take to address his cash flow issue.
• Three year pro formas for the balance sheet, income statement, and cash flow statement (indirect method)
• Calculations for both actual and sustainable growth rates.
• External financing needed, if any.