Jones Manufacturing has been in business for 30 years.About 3 years ago,the company spent about $2.5 million in upgrading/purchasing new equipment.Currently,due to bad weather,the company is suffering cash flow problems and is not able to pay its expenses or inventory purchases.One option for financing would be:
A)inventory financing.
B)asset-based financing.
C)sell the business.
D)All of the above

Question

Quizplus · Accepted Answer

Asset-based financing would be the best option for Jones Manufacturing as they have recently invested in upgrading/purchasing new equipment worth $2.5 million. This equipment can be used as collateral for financing, which will help in improving cash flow and paying expenses as well as inventory purchases. Selling the business or inventory financing may not be the best choice as they may not provide enough financial support in the long-term.

Jones Manufacturing Has Been in Business for 30 Years