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