NOTE: AP refers to accounts payable.
S-1 and S-2 represent Pattilla’s best-guess (most-likely) and worst-case forecasts, respectively, assuming no additional concrete information about Spartan Roofing.
S-1A and S-2A are based on a recent conversation that Pattilla had with Lawrence Wilson, the owner. Wilson claimed that he is going to “implement sounder credit policies,” and “eliminate some production inefficiencies.
Pattilla has not had time to carefully examine these claims, and wonders if these changes “would make any difference, anyway, assuming Wilson is right.”
Perform the appropriate amalysis. What would you recommend to Pattilla? Defend your advice.