Jim quickly called his senior management team in for a meeting, explained the situation, and asked for their help in formulating a solution. The group concluded that if the company’s current business plan were carried out, Garden State’s sales would grow by 10 percent from 2006 to 2007 and by another 15 percent from 2007 to 2008. Further, they concluded that Garden State should reverse its recent policy of aggressive pricing and easy credit, returning to pricing that fully covered costs plus normal profit margins and to standard industry credit practices. These changes should enable the company to reduce the cost of goods sold from over 85 percent of sales in 2006 to about 82.5 percent to 2007 and then to 80 percent in 2008. Similarly, the management group felt that the company could reduce administrative and selling expenses from almost 9 percent of sales in 2006 to 8 percent in 2007 and then to 7.5 percent in 2008. Significant cuts should also be possible in miscellaneous expenses, which should fall from 2.92 percent of 2006 sales to approximately 1.75 percent of sales in 2007 and to 1.25 percent in 2008. These cost reductions represented “trimming the fat,” so they were not expected to degrade the quality of the firm’s products or the effectiveness of its sales efforts. Further, to appease suppliers, future bills would be paid more promptly, and to convince the bank how serious management is about correcting the company’s problems, cash dividends would be eliminated until the firm regains its financial health.