George Stamper, a credit analyst with Micro-Encapsulators Corp (MEC) needed to react to an immediate email obtain from the freebie southwest sales business office. The local sales manager reported that the lady had an possibility to clinch an order via Miami Piquancy (MS) to get 50 encapsulators at $12, 000 every. She added that the lady was specifically keen to generate this buy since MS was more likely to have a continuing need for 40 encapsulators 12 months and could as a result prove a really valuable client. However , orders of this size to a new customer generally required hq agreement, and it was consequently George's responsibility to make a quick assessment of MS's attractiveness to a lender, and to agree to or brand the sale.
Mister. Stamper knew that MS was a medium sized company using a patch earnings record. After growing speedily in the 1980's, MS had encountered good competition in its princpal marketplaces and earnings had gone down sharply.
Mr. Stamper also built a number of other checks on MS. The company ahd a small concern of you possess outstanding, that were rated B by Moody's. Inquires through MEC's financial institution indicated that MS experienced unused credit lines totaling $5 milliion nevertheless had created discussion using its bank for a renewal of the $15 mil bank loan that was as a result of be refunded at the end in the year. Phone calls to MS's other suppliers suggested the company had recently been thirty days late in paying the bills.
What is the break even likelihood of standard? How is it affected by the delay just before MS compensates its bills.?
How ought to George Stamper's decision have teh probability of repeat orders?