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Annette [7]
2 years ago
6

Jose Peacher is an executive with a large manufacturing company. A former coworker of his recently started a company and raised

$1 million from a well-known angel investor even though he did not need the money to launch the business. Jose thinks his friend is foolish and cannot think of a single reason to take money from an investor if you do not require the funds to launch. If you were talking to Jose about his view, what would you tell him about this matter?
Business
1 answer:
Diano4ka-milaya [45]2 years ago
6 0

Answer:

You have to consider that angel investors invest money in exchange for equity, so it is a very cheap way of getting financed. There are two ways of evaluate what happened:

  1. Jose's friend was probably irresponsible for accepting the money from the angel investor, although he will not pay any interests for it.  The problem here is that Jose's friend might spend the extra money in frivolous activities or unnecessary expenses, e.g. rent a very fancy and expensive office. When you have a lot of extra money in your hands, it is very easy to spend it. OR
  2. Another way of analyzing what happened is that Jose's friend may want to share the risk of the new entrepreneurship with someone else. Maybe he/she has enough money to invest, but he/she is not willing to take the risk of investing it all himself/herself. Getting financed by an angel investor is a way of reducing your personal risk. Remember that a sole proprietor is personally liable for all of the company's obligations, but that changes for a LLP, LLC or a corporation.
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Answer:

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Explanation:

The question is completed first as follows:

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The requirement is to use the given information to calculate Windswept Inc's Quick ratio for 2010.

Quick ratio: this represents the ability of an organisation's short term liquidity to cover and cater for its short term obligation. Basically, it looks at the ratio of the current assets of an organisation (those that can be quickly converted to cash) to meet the current liabilities.

The formula for quick ratio= Current Assets - Inventory / Current Liabilities

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This means that the current asset of the company can only cover its current obligations up to about 86%. This is the quick ratio.

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