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Hampton Machine Tool Company

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Hampton Machine Tool Company On September 14, 1979, Mr. Jerry Eckwood, vice president of the St. Louis National Bank was considering a loan request from a customer located in a nearby city. The company, Hampton Machine Too] Company, had requested renewal of an existing $1 million loan originally due to be repaid on September 30. In addition to the renewal of the existin- loan, Hampton was asking for an additional loan of $350,000 for planned equipment purchases in October. Under the terms of the company's request, both loans, totaling $1.35 million, would be repayable at the end of 1979. Since its establishment in 1915, Hampton Machine Tool Company had successfully weathered the severe cyclical fluctuations characteristic of the …show more content…

This additional loan is required to purchase certain needed equipment. At the end of the year, as you can see for yourself, we expect to be able to have enough cash on hand to retire our obligations in full. For the past month or more we have been producing at capacity and expect to continue at this rate through the end of the year and beyond. On August 31, our backlog of unfilled orders amounted to about $36,500,000-approximately 90% of annual capacity. I should stress that these are firm orders from respected customers. Despite our backlog, our shipment schedule has been upset, particularly the last several months, because we have had to wait on our suppliers for shipment of electronic control mechanisms. On August 31, we had seven machines with an accumulated cost of about $1,320,000, completed except for the installation of these electronic components. The components were finally received last week and will enable us to complete a number of machines in the next few weeks. After this imminent reduction in work in progress of about $1,320,000, the remainder of our work in progress inventories will probably remain stable for the foreseeable future because of our capacity rate of production. We bought raw materials beyond our immediate needs in July and August to be assured of completing our orders scheduled to be

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