What is more important, that Harley-Davidson must not report the trust’s receiva

Question

What is more important, that Harley-Davidson must not report the trust’s receivables and liabilities on its own balance sheet, or the fact that Harley- Davidson now is able to borrow only about 71% of the value of its receivables instead of more than 96% prior to the credit crises of 2008-2010? Explain.

the whole case can be found in the below link.
https://books.google.co.in/books?id=id0IAAAAQBAJ&pg=PA370&lpg=PA370&dq=the+fact+that+Harley-+Davidson+now+is+able+to+borrow+only+about+71%25+of+the+value+of+its+receivables+instead+of+more+than+96%25+prior+to+the+credit+crises+of+2008-2010&source=bl&ots=R9PqweLZNw&sig=PzBENCAQhif8ajAahlXXnuePrIo&hl=en&sa=X&ved=0CBwQ6AEwAGoVChMI7tW11MvIyAIVCx6OCh2EtAfN#v=onepage&q=the%20fact%20that%20Harley-%20Davidson%20now%20is%20able%20to%20borrow%20only%20about%2071%25%20of%20the%20value%20of%20its%20receivables%20instead%20of%20more%20than%2096%25%20prior%20to%20the%20credit%20crises%20of%202008-2010&f=false

Explanation / Answer

The fact that Harley Davidson now is able to borrow only about 71% of the value of its receivables instead of more than 96% prior to the credit crises of 2008-2010 is more important to be disclosed.

This is very important to the shareholders and bondholders of the company. The fact that Hardely davidson's borrowing capacity has been reduced by about 26% is very signifcant and shows that the compnay is having increased financial distress costs. This reduces the value of the company and the cost of capital of the firm increases. This also indicates that that the financial managers of the company should carefully evaluate the financial heath of the compnay before taking additional debt. This also increase the case of insolvency. This information has to be cleared discosed to the public and should also be filed with the SEC

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