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Case 13-6

Prepared by

LaShonda R. Unseld

for Professor C. E. Reese

in partial fulfillment of the Requirements for

ACC 770 – Managerial Accounting

School of Business/Graduate Studies

St. Thomas University

Miami Gardens, FL

Term A3/ Summer 2011

June 2, 2011

Table of Contents

Issues.......................................................................................................................................1

Facts.........................................................................................................................................1

Analysis.....................................................................................................................................1

Conclusions/Solutions/Recommendations...............................................................................3

I Issues:

1. What do you think is happening at Lloyd’s and The Emporium?

2. What financial ratios and questions raised in your analysis of the two companies’ financial statements support your opinions?

II Facts:

1. In March 2002, Richard Allen, an assistant credit analyst for the quality Furniture Company, was concerned about changes in two of the Quality’s accounts in Minnesota – Lloyd’s, Inc., of Minneapolis and The Emporium department store in St. Paul.

2. Lloyd’s had been a customer of Quality Furniture for over 30 years and had previously handled it’s affairs in a most satisfactory manner. The Emporium was a comparatively new customer of Quality’s, having established an account in 1993.

3. Both accounts were sold on terms of 2%, 10, net 30, and although was not discounting, had been paying invoices promptly until December 2001. Ralphson had previously established a 50,000 limit on Lloyd’s and an $85,000 limit on The Emporium.

4. In early March 2002, Richard Allen received the