As a junior congress person you have been asked to help promote a bill to allow casino gambling in your state. There is much opposition to this bill. Using distributive bargaining, discuss the pros an

1. What are the main financial risk management issues that Cathy and the rest of the management team at Kilgore need to focus on?

Ans: The main focus of the company had always seemed to be cash flow management. While the business had managed to be profitable on an accounting basis over the past five years, it seemed that Kilgore was always short of cash at critical times of the year. In part this was due to thin margins and generous payment terms demanded by the auto manufacturers that were Kilgore’s key clients.

       With tight market conditions, the major auto manufacturers were able to demand and get extended payment terms. Thus management of cash flow was a key function for Cathy Williams and her treasury team to focus on.

      While economic conditions in the automobile industry had improved dramatically since the depths of the financial crisis, banks were still wary of extending operational lines of credit. Many industry observers felt that the overall market conditions were still shaky and the recent increase in automobile sales and profits might be a consequence of necessary replacement of aging vehicles, rather than a sustained improvement in the mind-set of consumers, as many consumers delayed new car purchases as a result of the crisis.

      They need to focus on the payments given by their clients. Where they can run into crisis if they are not paid after delivery. Then they will be in crisis so they need to address this issue.

      They need to focus on change of currency as they are the Japanese company, and there are going to deliver products to us company so they need to enhance the rates and need to have bargain with customer, so that they will be in profits.

      The new U.S. auto supply contract held the risk of dramatically increasing the concerns about cash flow management. While the addition of accounting and control systems that Cathy and her team had implemented had improved the cash flow situation significantly.

2. How would you priotorize this issues?

Ans: The risk to be priotorize based on management risk, Business risk, market risk, operational risk and financial risk.

1. First they need not repeat the whole issues which were done before.

2. Customer payment issue

3. Treasury issue

4. Cash flow management issue

5. Change of currency issue

6. Who should make hedging decisions?

7. Dollar exchange issue.

Reference:

 Fraser, J., Simkins, B., & Narvaez, K. (2014). Implementing enterprise risk management: Case studies and best practices. John Wiley & Sons