- Katherine had to rush to the bank every few months to borrow more money. She didn't really talk to her banker about her financial situation because she had no trouble getting larger loans. You see, she was always on time with her payments. Katherine always took trade discounts to save money on her purchases. That is, she paid all of her bills within 10 days in order to save the 2% discount offered by her suppliers for paying so quickly.
- Katherine's products were mostly purchased on credit. They'd buy a few lamps and a pot, and Katherine would let them pay overtime. Some were extremely slow to pay her, taking six months or more.
- Katherine noticed a small drop in her business after three years. The local economy was struggling, and many people were losing their jobs. Nonetheless, Katherine's business remained steady. Katherine received a phone call from the bank one day, informing her that she was behind on her payments. She explained that she had been so preoccupied that she had missed the bills. The issue was that Katherine did not have enough money to pay the bank. She frantically called several customers for payment, but none of them could pay her. Katherine had a classic cash flow problem.
<h3>How is it possible to have high sales and high profits and run out of cash while running a business?</h3>
It is entirely possible if you have a high level of accounts receivables and inventory and a low level of accounts payables. A sale is recorded when an invoice is raised, and a shipment is delivered; this does not always imply that you received cash and that it is recorded in your accounts receivable. Similarly, if you keep a lot of inventory, a lot of your money is locked up until the inventory is sold. On the contrary, if your payment terms with your suppliers are less favorable, you will end up paying before your receivables convert to cash. As a result, high sales and profits do not always imply a strong cash position.
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The asset turnover is 2.4 times.
Asset turnover = Net sales \div Average total assets
Asset turnover = $3,000,000 \div [ $1,000,000 + $1,500,000 ] \div 2
Asset turnover = 2.4 times
Asset turnover is the ratio of total sales or revenue to average assets. This metric helps investors understand how effectively companies are using their assets to generate revenue. Investors use asset turnover to compare similar companies in the same industry or group.
In the retail sector, an asset turnover of 2.5 or higher may be considered good, but in the utility sector, a company is more likely to aim for an asset turnover between his 0.25 and 0.5.
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Answer: in personam jurisdiction
Explanation: The “long-arm statute,” is a law in majority of states that explains when a court can have in personam jurisdiction over parties who do not reside in that state. Certain conditions must be met for the court to have this jurisdiction. In general, the cause of action should have occurred in the state where the case is being filed; the defendant was personally served with the court papers in the state; or the defendant has a minimum contact with the state.
In personam jurisdiction is defined as a court's jurisdiction over the parties in a lawsuit, that is, it has both the authority to rule on the law and evidences of a suit and the power to enforce its decision upon all parties to the suit.
Answer :
A. Stereotype (i think this is right)
Answer:
A. Venture capitalists.
Explanation:
Venture capitalists are private investment firms that makes available funding to start up companies which shows traits of rapid growth, high potential returns while also maintaining a stake in the company. The aim of venture capitalists is to receive high return on their investment in the long run.
The risk involved in being a venture capitalist is high hence they look out for growth potential in would be borrowers while also earning huge profit on successful borrowers in the long run.
Venture capitalist recoup their investment either by receiving fees on the funding provided, earn interest on the funding or have an equity stake in the company that obtained the funding.
The source of finance that would be apt for Carlos to fund is business is venture capitalists.
