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Worries over high unemployment pushed U.S. consumer confidence to a four-month low in August, while spending rose modestly in July, indicating the economy’s recovery from recession would be lethargic.

Source: Bloomberg. com

Date: 8/28/2009

Keys: Economy, inventory planning

Link: http://www.reuters.com/article/ousiv/idUSN2835824120090828

Questions for discussion:

  • As a corporate finance manager planning inventories and projected cash flows for the last quarter of the year, how would you interpret this economic information in terms of future financial impact on your firm?
  • Would you increase or decrease your inventory levels if you were an electronics firm such as Samsung or Sony?
  • Would you be optimistic or pessimistic about sales this coming holiday shopping season if you were working at Best Buy?
  • Which businesses do you think should be more aggressive in stocking their inventories and which should be more conservative? Explain your thinking.

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