THE BEST LAID PLANS OFTEN GO AWRY Katherine Potter knew a good thing when she saw it. At least, it seemed so at first. She was traveling in Italy when she spotted pottery shops that made beautiful products ranging from ashtrays to lamps. Some of the pottery was stunning in design. Katherine began importing the products to the United States, and sales took off. Customers immediately realized the quality of the items and were willing to pay top price. Katherine decided to keep prices moderate to expand rapidly, and she did. Sales in the second three months were double those of the first few months. Sales in the second year were double those of the first year. Every few months, Katherine had to run to the bank to borrow more money. She didn’t really discuss her financial situation with her banker because she had no problems getting larger loans. You see, she always paid promptly. To save on the cost of buying goods, Katherine always took trade discounts. That is, she paid all bills within 10 days to save the 2 percent offered by her suppliers for paying so quickly. Most customers bought Katherine’s products on credit. They would buy a couple of lamps and a pot, and
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This note was uploaded on 01/26/2011 for the course BUSN 115 taught by Professor Reynolds during the Winter '10 term at DeVry Pittsburgh.