Seattle's Pike Street Market was selected for the place of the first store because it was a favorite destination for international travelers who were prepared consumers of new and exotic products. After starting an aggressive sales and marketing effort, and the introduction of new products, Aussie Pies grew rapidly from just one store and sales of $6 million in 2006 to 10 shops and sales of $10.35 million by 2009.
Yet, the firm's rapid growth in earnings was accompanied by falling profits and a considerable increase in receivables, inventories, and capital investments in new shops. The resulting cash outflows were funded by increased borrowing from Bank of America in addition to stretching the company's payables, i.e., taking longer to pay providers. Bank of America unwillingly raised the maximum amount available to the business under its term loan to $3 million from $2 million. In early January of year 2010, Jan Muska, the corporation's chief financial officer, was uncertain whether the new credit limit would enable the firm to execute its growth strategy of opening five new stores in 2010.
PUBLICATION DATE: November 08, 2007 PRODUCT #: TB0089-PDF-ENG
This is just an excerpt. This case is about FINANCE & ACCOUNTING
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