The increase in purchases and the interest and principal payments on the mortgage had seriously eroded Reed's positive cash flow in the past three years. The cash crunch had been met through a combination of slowly increasing the line of credit at the bank and, during the last year, not taking cash discounts offered by the store's suppliers. Reed's purchased about 80 percent of its purchases terms 0, 60 until this year had always taken th cash count, but accounts were now almost 40 days past due, and the suppliers demanding were payment with the threat of ceasing deliveries until p the idea was made. This threat had pushed to see his banker with of his line of credit another $100,000.
In the past, Jim had only dealt with his vMI classmate at First Virginia National Bank, Bob Roberts, and after talking about the good old days at the military school, an increase in the line of credit had always been granted without Bob ever looking at Reed's financial statements. Today, however, had been a different story. Two months ago, Roberts had been promoted to a public relations job with the bank and Jim had been introduced to Holmes, who had asked to see an up-to-date set of financial statements at their first meeting. In today's meeting Holmes had talked about cash flow problems and even mentioned the possibility of financial distress. There had been no easy talk about the past or