Ch16 Answers-Questions - Boxed Text Discussion Questions...

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Boxed Text Discussion Questions Growing a Business: Working Capital Problems in a Small Business 1. Why is it challenging for businesses whose primary sales are seasonal to maintain year- round financing? Students should be able to recognize that rents, wages, and other expenses must be paid monthly (or even more often) regardless of how good sales are during each month. Small businesses with largely seasonal sales must find ways to balance their cash flow to ensure they have sufficient funds to meet their obligations even during slow periods.
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2. What tools can small businesses with seasonal sales utilize for year-round financial management? During strong sales periods, these firms must set aside extra funds to ensure that they can meet their obligations during slow periods. They may be able to invest these funds in interest- bearing checking accounts, short-term CDs, or other short-term securities to earn a little extra. They can also reduce their work force during slow times and/or look for additional products to that may sell during slow periods to help balance the cash flow (e.g., a boat and water-ski store may add snow skiing products and accessories). The important thing is to be
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This note was uploaded on 03/12/2011 for the course BUSINESS 300 taught by Professor Reynolds during the Fall '10 term at Los Rios Colleges.

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Ch16 Answers-Questions - Boxed Text Discussion Questions...

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