SRI OFFICE PRODUCTS INC - February, 2008 SRI OFFICE...

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February, 2008 SRI OFFICE PRODUCTS INC. EXECUTIVE SUMMARY SRI Office Products Inc. is a national supplier of all types of stationary products, with a wide national network of distributors. However, in 1995 it faced payment receipt issues with one of its biggest distributors, Macdonald Stationary and Office Supplies Ltd. As of September 1995, the Macdonald’s receivable was $2.4 million and 156 days old. The company had also delayed showing its financial statements to SRI’s credit manager for fear of showing its losses at the end of 1993, 1994 and August 1995. These losses had also eliminated the company’s retained earnings and had reduced the company’s shareholder equity to less than 2 percent of its total assets. This meant that Macdonald’s debt ratio was above 97% which led to its bank refusing to extend its line of credit any further, and the company’s inventory was also very high at 61 days. Furthermore, there were problems with mismanagement by the new ownership in the
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