SURVIVING RAPID GROWTH

Glasspray Corporation is a small firm that makes industrial fiberglass spray equipment. Despite its size, the company supplies to a range of firms from small mom-and-pop boatmakers to major industrial giants, both overseas and here at home. Indeed, just about every molded fiberglass resin product, from bathroom sinks and counters to portable spas and racing yachts, is constructed with the help of one or more of the company's machines.

Despite global acceptance of its products, Glasspray has repeatedly run into trouble with regard to the management of its current assets and liabilities as a result of extremely rapid and consistent increases in year-to-year sales. The firm's president and founder, Stephen T. Rose, recently lamented the sad state of his firm's working capital position: "Our current assets aren't, and our current liabilities are!" Rose shouted in a recent meeting of the firm's top officers. "We can't afford any more increases in sales! We're selling our way into bankruptcy! Frankly, our working capital doesn't!"

1			Discussion Questions Normally, rapidly increasing sales are a good thing. What seems to be the problem here?
2			List the important components of a firm's working capital. Include both current assets and current liabilities.
3			What are some management techniques applied to current liabilities that Glasspray might use to improve its working capital position?