Publications
Publications
- September 1992 (Revised March 1997)
- HBS Case Collection
Summit Distributors (A)
By: William J. Bruns Jr. and Amy P. Hutton
Abstract
Summit Distributors was in danger of violating loan covenants because of slow economic activity and forecasted 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.
Keywords
Taxation; Cost Accounting; Cash Flow; Interest Rates; Economic Systems; Borrowing and Debt; Financial Statements; Valuation; Accounting Audits; Financing and Loans; Accounting Industry; Legal Services Industry
Citation
Bruns, William J., Jr., and Amy P. Hutton. "Summit Distributors (A)." Harvard Business School Case 193-053, September 1992. (Revised March 1997.)