POLAR SPORTS, INC.

DISCUSSION QUESTIONS

1. Which factors should Mr. Weir consider in deciding whether to adopt

level production? 


2. What are the total savings from adopting level production? 


3. Prepare pro forma income statements, balance sheets, and cash flow
statements to estimate the amount of funds required and the timing
of the needs under level production. Does Polar need more than $4
million in short-term financing in any given month? 


4. Think about the concerns of Polar’s bank. As the banker, would you be
willing to extend the line of credit to more than $4 million to finance
level production? Why or why not? 


5. What other sources could substitute in part for bank lending if the lender
is not willing to extend the present line of credit? 


6. Compare the liability patterns feasible under the alternative production

plans. What implications do their differences have for the risk
assumed by the various parties? 


7. What would be the impact of unsold inventory on cash flows and

projected cost savings? 


NOTE: You will assume that interest income and interest expense (notes and
bonds) will be based on opening balances (no need for goal seek in this case)