Case | HBS Case Collection | November 1974 (Revised May 1994)

Science Technology Co.

by Thomas R. Piper

Abstract

The president of a medium-sized electronics company is evaluating the financial forecasts and proposed financing program submitted by the chief financial officer. The forecasts are prepared in constant dollars, on which basis the proposed financing plan seems reasonable. However, when inflation is incorporated into the forecasts, the financing need far exceeds available sources of funds, and adjustment on the operating side is necessary. The danger of relying on a single set of forecasts based on the most likely outcome is also demonstrated.

Keywords: Currency; Financial Strategy; Forecasting and Prediction; Inflation and Deflation; Risk and Uncertainty; Outcome or Result; Technology Industry; Electronics Industry;

Citation:

Piper, Thomas R. "Science Technology Co." Harvard Business School Case 275-058, November 1974. (Revised May 1994.)