Primo Benzina AG was a retail chain of petrol stations offering petrol, snacks, restaurant meals, and high-quality service in central Europe. In 2006, the company began operations with two outlets in Stuttgart, Germany, and another two outlets in Basel, Switzerland. The company grew rapidly from four outlets and sales of 2.4 million euros in 2006 to 24 outlets and sales of 38.1 million euros in 2009. Yet the company's rapid growth in revenues was accompanied by declining profitability and a substantial increase in receivables, inventories, and capital investments in new retail outlets. The resulting cash outflows were financed by short-term loans from Dresdner Bank and by slowing payments to trade creditors. Dresdner Bank reluctantly increased the maximum amount available to the company under its term loan to 12 million euros from 10 million euros. In early 2010, Otto Schroder, Chief Executive Officer, and Annegret Heuermann, the company's Chief Financial Officer, completed a review of the company's financial situation. The company's executives were unsure whether the new credit limit would permit the company to implement its growth strategy, since the company now had a limited amount of cash available to finance additional outlays for working capital and capital expenditures. The teaching objectives are to: (1) assess the company's business strategy and its implications for future financial performance; (2) develop cash flow statements and evaluate the impact of operating, investment, and finance decisions on the company's cash flows; (3) evaluate the company's financial performance and its investment in working capital; and (4) determine the company's future cash flow generation, determine appropriate future financing policies, and evaluate the sensitivity of its financing needs to alternative economic conditions. Specifically, students will consider several issues