Case: GUNA FIBRES, LTD.

Study Questions:

1- Examine Malik's monthly financial forecast. Why do Guna's financial

requirements vary across the year?

What are the key determinants of

Guna's borrowing needs?

2-

On the basis of Malik's forecast how much debt will Guna need to

arrange for the coming year? Will Guna be able to zero out the line of credit
this year? If not, what is the cause of Guna's ongoing need for debt?

3- Use your intuition to assess the desirability of the two proposals.

Do you expect these proposals to relieve or worsen Guna's ability to clean up
its bank loan? What other alternatives should Malik consider?
4-

Using

the

monthly

transportation manager.

forecast,

model

the

proposal

from

the

How helpful is this proposal in relieving Guna's

reliance on debt financing? How would you assess the costs and benefits of
this proposal?
5- Using the monthly forecast, model the proposal from the operations
manager. How helpful is level production in relieving Guna's reliance on debt
financing? How would you assess the costs and benefits of this policy?
6- What are your recommendations for Kumar?