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Essay on Case Study 4

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KHF CORPORATION
SEEDS OF DISTRESS
Jim Layton, controller for Kitty (Hawk Food), Inc. (KHF) was under considerable stress as he walked toward the chief executive's office. Marshall Horne, the CEO, was not known to take bad news well. In his hands, Jim held two letters from food suppliers that threatened to cancel KHF's trade credit accounts. KHF had developed difficulties in cash flow such that their payments on the accounts had been late, at best. The suppliers provided normal trade terms to KHF, with a 2% discount for early payment (within 10 days), and a 30 day limit. No purchase limits had been placed on the firm.
KHF had depended heavily on trade credit for the recent expansion of its service area into the Outer Banks of North
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"Alright, what's up?"
"I have some correspondence from some of our business contacts," said Jim. He was trying to avoid discussing the details in front of Tibbs, but Horne didn't stop the game. "It's rather pressing."
"Well spit it out!" said Horne, obviously getting more agitated. Jim hesitated. "Well?" nudged Horne.

Jim took a deep breath. "Our two biggest suppliers are threatening to cut us off" said
Jim. Horne looked up suddenly. Tibbs looked shocked.
"And HOW did you get us into that?" roared Horne, trying to save face. "Lets' see," he said, snatching the letters from Jim. "I'll be right back," he said, looking back at Tibbs.
Outside the office, Horne scowled at Jim. "What are you thinking, saying that in front of a customer?"
"I tried to avoid it - I asked you to give me a few minutes," replied Jim.
Horne read the letters. "Isn't it your job to keep these things from happening? What did they teach you at that business school anyway? If you want something done right, you have to do it yourself. I'll go see these idiots today and set things straight. Cut me two checks for the balances." Jim stood his ground. "Unfortunately, we haven't collected most of our customer accounts. We don't have enough in the account to cover even half of one of these" replied
Jim. Both of them knew that Horne was supposed to collect accounts due as he made the rounds of his customers.
Horne smacked the letters in frustration. "Get back to
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