203 C h A P T E R S I x T E E n CASE STUDIES I n the previous chapters we have covered some of the basic principles that need to be applied for sound corporate and business financial management. It will be beneficial to see how some of the more important principles work in practice, and so this chapter provides real case studies that demonstrate good and bad practice. For the purpose of confidentiality I have not named any companies or banks. In recent years the banks have come under considerable criticism, most of which they deserve. You will see examples in these cases. However, you will also see cases of poor financial management by corporates, and I am sure that you can add to this list. It is hoped that these cases will help you recognize both good and bad financial management behaviour within your own organizations. Case 1. Case 2. Case 3. Case 4. Case 5. Case 6. Case 7. Case 8. Case 9. Case 10. Misuse of short-term funds with disastrous consequences. Foreign exchange hedging v speculation. Stock valuations and profits. Bank loans and covenants. Separating money transmission from a lending bank. Credit ratings and fundamental analysis. Advantages and disadvantages of internal charging. Marginal costing v fully integrated standard costing. Overtrading: profits but no cash. Integrating the planning and budgeting process, leading to outsourcing. Case 11. Government deficits and cost cutting. Case 12. A 5 per cent increase in sales is generally worth more than a 5 per cent reduction in costs.