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Urban Outfitters Continuing Case Study Part 3: Financing a Business Review Questions 1. What did Benjamin Franklin mean by “necessity never made a good bargain?” Why? If a person needs a product they will be willing to pay above & beyond the normal asking price. Especially if the product is a commodity. Also ── I believe the message Benjamin Franklin is trying to send plan for the expected & be prepared for the unexpected ─ for there is no time for bargaining with the absolute need for now. 2. How does “cash in the bank” improve company performance? By putting money to work by investing in liquid assets that offer an attractive rate of return.

Urban outfitters Part 3

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Page 1: Urban outfitters Part 3

Urban Outfitters Continuing Case Study

Part 3: Financing a Business

Review Questions

1. What did Benjamin Franklin mean by “necessity never made a

good bargain?” Why?

If a person needs a product — they will be willing to pay above &

beyond the normal asking price. Especially if the product is a

commodity.

Also ── I believe the message Benjamin Franklin is trying to send → plan for the expected & be prepared for the unexpected ─ for there is

no time for bargaining with the absolute need for now.

2. How does “cash in the bank” improve company performance?

By putting money to work — by investing in liquid assets that offer an

attractive rate of return.

3. Give examples of companies that became too involved in risky

finance.

Page 2: Urban outfitters Part 3

When the booming financial markets ── during the 21st century this

lured financial mangers into overconfidence —— resulting in overly

risky decisions.

Firms invested heavily & pretty much lost everything ── they

couldn’t pay for their homes, cars, & not even the basic

necessities.

4. After reading this case, would you be more or less inclined to

use debt to expand your business?

More inclined ── if the business needed money and the market was strong &

I financed correctly there would be low risk

If I had to choose ── I would want to owe money to a lender and pay

back in fixed amounts.