1. What is going right with this business? What concerns you?

2. Where is the cash going?

3. Will strong business performance in 2007 improve the cash position?

4. Do you agree with Maggie Brown’s accounts-payable policy?

5. What are the alternatives for solving the business’s cash problem?

6. What is the problem?

This case captures the problems concerning cash flow and working-capital management typical of small, growing businesses. At the end of 2005, Bob and Maggie Brown have completed their third year of operating Horniman Horticulture, a $1-million-revenue woody-shrub nursery in central Virginia. While experiencing booming demand and improving margins, the Browns are puzzled by their plummeting cash balance. The case highlights the difference between cash flow and accounting profits, as well as the common negative effects of growth on cash flow. It also provides a forum for instilling appreciation for the relevance of free cash flow to business owners and managers, introducing financial-ratio analysis, developing the concept of the cash cycle and working-capital management, and motivating the use of financial models.