Case ID: 193053
Solution ID: 444

Summit Distributors A Case Solution

Case Solution

Summit Distributors was in danger of violating loan covenants because of slow economic activity and forecast-ed losses and was faced with a choice. Changing the inventory valuation method from LIFO to FIFO would avoid default but would require higher future income taxes. Not changing could mean default on covenants, renegotiating loan terms at less favorable interest rates, or possible bankruptcy.


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