Jones Electrical Distribution

Jun 29th, 2015
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Stanton University
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Jones Electrical Distribution is a rapidly growing company expecting further rise in sales in the future. However, a low cash flow was causing the company to increase its borrowing from the local Metropolitan Bank.

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Jones Electrical Distribution Part I: Describe the Situation Jones Electrical Distribution is a rapidly growing company expecting further rise in sales in the future. However, a low cash flow was causing the company to increase its borrowing from the local Metropolitan Bank. The past year, Jones Electrical Distribution had to borrow $250,000 from the bank, which is the maximum loan that Metropolitan will allow to any one borrower. Therefore, Nelson Jones, owner and president of JED, was looking for a bank to grant larger loans. A friend of Jones did business with Southern Bank & Trust, which offered up to a maximum loan amount of $350,000. Jones felt this amount was more than enough and was hopeful SB&T would agree to a business relationship. The credit department of Southern Bank & Trust is currently investigating JED to determine if they should conduct business with one another. Part II: State the problem Nelson Jones, sole owner of Jones Electrical Distribution, has recently been faced with the situation where an increase in his loan amount is imperative. Jones currently has a relationship with Metropolitan Bank where he received a loan of $250,000, the maximum amount the bank will make. The end of year statements between 2005 and 2006 showed a sizeable decrease in cash, as well as a hasty increase in Accounts Payable and Line of Credit, both considerable grounds for an increase in loan amount. The issue at hand arises due to the fact that Metropolitan Bank is either u

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