Be Our Guest

Topics: Money, Debt, Revolving credit Pages: 1 (365 words) Published: July 17, 2013
Why did the current amount of debt limit how much the business could borrow to solve the current cash crunch? Be Our Guest, Inc. has maxed out their available credit. The company has a high balance of long-term debt and a revolving credit line to help pay for their business expenses. Due to the fact that the company’s customers did not pay their bills on time Be Our Guest, Inc. ran out of cash which hindered them in further extending their credit. Banks won’t extent loans when there isn’t any security whether it can be paid back on time. Why does the fact that some customers are late paying in January make using the receivables for collateral so expensive? Lenders are securing their funds which a high interest rate because Be Our Guest, Inc. had past due receivables. Also the lenders described in the textbook were only willing to lend 70 percent of the amount collected from customers as they don’t have a guarantee that the company’s customers will ever pay their bills. Should the owners have reduced payments to themselves to be able to pay more to vendors and suppliers? In a functional business owners should not have to reduce payments to themselves to be able to afford running the business. Owners have to deal with their personal everyday expenses and need to have some source of income to be able to afford a normal lifestyle. If the business is not doing well, then an accountant needs to review the financials of the business and eventually changes to make the business more profitable need to be made. How is it that a business could “have enough money” but still not be able to pay its bills? Be Our Guest, Inc., for example, had sufficient business during busy months and therefore had enough money in receivables. The problem was that the customers did not pay their bills on time so that the company’s receivables did not turn into actual money in their bank account. Also, during months in which their business was slowing down they didn’t have enough money left...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Be Our Guest Research Paper
  • Be Our Guest Inc Essay
  • Be Our Guest, Inc. Essay
  • Essay about Be Our Guest Inc Summary
  • Be Our Guest Case Essay
  • Be Our Guest Summary Essay
  • The Guest Essay
  • Be Our Guest, Case Analysis Essay

Become a StudyMode Member

Sign Up - It's Free
David Eisley & Bob Kulick | MD电忍 | Personal Nursing Philosophy