Fiction Entertainments
On Wednesday, May 9, 2007, Esteban Lázaro, managing director of Fiction Entertainments, received an unexpected call from Alejandro Sáez, branch manager at Banco Santander, the company's main bank. Alejandro was sorry to inform Esteban that the bank was tightening its credit policies and could not increase the company's line of credit, as Alicia Casado, CFO of Fiction Entertainments, had requested a few days earlier. Alejandro also warned Esteban that although the company's existing facilities had a limit of four million euros, this limit would no doubt be lowered at the time of renewal in October and November. Esteban asked for a meeting with Alejandro that Friday to explain the business projections for the year and show him that the company was profitable and solvent.
Collection: IESE (España)
Ref: F-863-E
Format: PDF
Number of pages: 5
Publication Date: May 2, 2012
Language: English, Spanish
Review date: May 12, 2014
What material is included in this case:
Description
On Wednesday, May 9, 2007, Esteban Lázaro, managing director of Fiction Entertainments, received an unexpected call from Alejandro Sáez, branch manager at Banco Santander, the company's main bank. Alejandro was sorry to inform Esteban that the bank was tightening its credit policies and could not increase the company's line of credit, as Alicia Casado, CFO of Fiction Entertainments, had requested a few days earlier. Alejandro also warned Esteban that although the company's existing facilities had a limit of four million euros, this limit would no doubt be lowered at the time of renewal in October and November. Esteban asked for a meeting with Alejandro that Friday to explain the business projections for the year and show him that the company was profitable and solvent.
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Year: 2007
Geographic Setting: Spain
Learning Objective
The main objectives are
o To gain a deeper understanding of the difference between profits and financing needs.
o To understand the mechanisms that govern the Need of Funds for Operations and Working Capital in a company that is growing.
o To develop the skill of analyzing and diagnosing financial problems.
Despite a general improvement in its profitability and solvency ratios, the company is suffering serious financial strains.
o To gain a deeper understanding of the difference between profits and financing needs.
o To understand the mechanisms that govern the Need of Funds for Operations and Working Capital in a company that is growing.
o To develop the skill of analyzing and diagnosing financial problems.
Despite a general improvement in its profitability and solvency ratios, the company is suffering serious financial strains.
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