Home / Questions / In reviewing Fargo Company s financial statements for the past two years Lilian Stone a ba...
In reviewing Fargo Company s financial statements for the past two years, Lilian Stone, a bank loan officer, noticed that the company s inventory level had increased significantly while sales revenue had remained constant. Such a trend typically indicates increasing inventory carrying costs and slowing cash inflows. Ms. Stone concluded that the bank should deny Fargo s credit line application. Required Explain how implementing an effective just-in-time inventory system would affect Fargo s financial statements and possibly reverse Ms. Stone s decision about its credit line application.
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