5875 senior notes due interest payable semi annually

Info icon This preview shows pages 4–6. Sign up to view the full content.

View Full Document Right Arrow Icon
5.875% Senior Notes; due December 16, 2036; interest payable semi-annually on June 16 and December 16 . 5.40% Senior Notes; due September 15, 2040; interest payable semi-annually on March 15 and September 15 . Capital Lease Obligations; payable in varying installments through January 31, 2055 . Other. . Total debt. . Less current installments . Long-Term Debt, excluding current installments . January 30, 2011 January 31, 2010 I $ 0 $ 999 1,000 1,000 1,297 1,258 3,033 3,040 499 0 2,960 2,960 499 0 452 408 9 17 --- --- 9,749 9,682 1,042 1,020 --- --- $ 8,707 $ 8,662
Image of page 4

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
You Are the ~!,nager, You have been hired to help grow a start-up. It reported sales of $2 million during the past fiscal quarter. Currently, it does not offer trade credit, as the majority of its customers use credit cards. In a bid to expand the business, you are asked to determine whether extending trade credit is a good idea. What factors are important for you in making this decision? [Answer, p. 4-331 4-5 Module 4 I Credit Risk Analysis and Interpretation such as retailers that purchase merchandise for the end-of-year holiday season. Because these purchases are made long before expected sales, suppliers extend credit to cover the intervening months. Such seasonal cash needs are routine in nature and credit risk is relatively low. The sup- pliers' past experiences with a company will dictate the credit terms extended to it. In the event that suppliers' credit does not extend far enough, a company might need to arrange short-term loans from their bank. Cash needed for operating activities is not uniformly "low risk." Contrast cyclical, ongoing operating cash flow needs as discussed above, with cash needed to cover operating losses. If the losses are recurring, a company's cash needs might not be temporary unless it is able to return quickly to profitability. This makes it more difficult for the company to raise capital because of the increased uncertainty about whether and when it will be able to repay the borrowed amounts. A company's need for cash can be critical, and finding a willing lender can be the difference between bankruptcy and continued operations. Investing activities Companies routinely require large amounts of cash for investments including purchases of new equipment and property (capital expenditures) and for corporate acquisitions. These cash needs vary in timing and amount and are especially important for start- ups and growth companies that need cash to construct or purchase their initial plant and stores. For example, in the year ended January 2011, Home Depot opened two new stores in the U.S. and renovated other stores. They paid more than $1 billion cash for these new assets. As entities mature, they often settle into more predictable patterns of capital expenditures. Financing activities Companies occasionally need credit for financing activities, such as issuance of debt for repayment of maturing debt obligations or the repurchase of common stock.
Image of page 5
Image of page 6
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern