The owner of Pooch It Doggie Daycare and Groomer, Jan Michaels

It Takes Money to Make Money

The owner of Pooch It Doggie Daycare and Groomer, Jan Michaels, is well aware that it takes money to make money. She’s working on a plan to expand her facility and the services she offers but cannot finance the expansion without outside financing. She’s not completely clear on the benefits and drawbacks of each of her financing options so she’s enlisting the help of a group of friends who are in a business class and have a clearer understanding of her viable financing options (that would be YOU!). Jan has about half of the money necessary but is looking for the best option for the other half—which she plans to pay back in about 11 to 12 months.

Complete the following table from the perspective of Jan, the business owner.

Type of
Financing    Advantages    Disadvantages    How viable of an option is this? Why?

Trade Credit
Promissory Note
Unsecured Bank Loan
Factoring

As the owner’s chief financial officer, you decide what the most appropriate option would be for Jan. Justify your decision.

Here’s the SOLUTION

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