Garry Halper Menswear Limited: A Loan Request for an Export Order
(6 pages of text)
Garry Halper Menswear Limited (GHM) is a medium-sized manufacturer of superior-quality men’s suits and jackets that up to now have largely been distributed in Canada. The firm has landed a very large order for men’s suits with Sutton’s in the United States. To meet the order, the firm has decided to import partly completed suits from China. The treasurer of GHM must assess the financing needs and related risks that result from this large increase in sales. At the same time, he believes that the company’s present bank is timid in its response to the firm’s needs, and he would like to consider another banking relationship.
This case is designed to take on the perspective of the corporation, or the bank supplying funds to the corporation, or both. From the standpoint of the corporation’s chief financial officer (CFO), the case introduces students to the financial management implications for a firm that both imports and exports goods. Discussion points in the case include identifying the amount and duration of a firm’s working capital needs, managing foreign currency exposure, managing the risks of offshore purchasing and selling, and structuring a working capital loan. From the standpoint of the bank, students should assess the opportunities and risks presented by a client that is importing and exporting.
Canada; United States; China, Small, 2013
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