Fin 370 - Cash Flow Analysis

Cash Flow Analysis

Timothy Bingham

FIN/370

May 16, 2016

Su-Yi Lien

Cash Flow Analysis

        After reading the short story on Frank Smith Plumbing, it is highly suggested that a new vehicle has to be purchased in order to keep the business going.  Unfortunately, there is no money in order to purchase a new truck outright.  So the oldest daughter, Stephanie is trying to persuade her father into borrowing the money from the bank in order to purchase a new truck instead of closing the business down and working for another company.  Now the biggest problem of the situation is that Frank’s wife, Elena, is trying to contact the bank manager and his wife in order to ask for their help about getting the loan. So, Stephanie has got to talk her mother out of doing this.

        Stephanie mentioned to her mother that it is unethical to ask the bank manger and his wife in order to get the loan.  The first issue is that a person should never mix a personal relationship with a professional relationship.  The reason being is that if the personal relationship falls through then there is a great possibility that the personal relationship will fall as well.  Also, asking a personal favor from the bank manager is placing his career at stake and it could cost him his job by doing this without taking the legal channels to apply for the loan.  However, contacting the bank manager and asking for advice on what steps to take to in order to apply for the loan may be acceptable.  But most of all, a person should never use the, “if you scratch my back, I will scratch yours” method in order to get something in business.  There is an understanding in business that people do take better care of others at certain times.  But if a bank gives a certain amount with limited criteria to go on, then they will have to do the same with every other person that comes in.  

Also, no one should make anyone feel obligated or feel like they are forced to something due to past experiences.  In other words, since this or that has been done for a certain amount of time, then the favor that is being asked should not be an automatic in return.  Making a person feel like they are being forced out of guilt will ruin almost anything in life.  

There are also other involved when it comes to applying for a loan.  There are rules and regulations on how a loan should be applied for.  By going straight to the bank manager to ask for the loan is skipping many steps when applying for a loan.  A person must fill out the proper paperwork in when applying for a loan.  The person’s credit history must be pulled to get an idea on how responsible they are when it comes to paying their bills.  There has to be enough money left over on the credit they are already paying on.  Also, does the person have any credit at all to even qualify for the loan?