Question: Tom Andersen owns an electronics firm in Wichita Kansas He
Tom Andersen owns an electronics firm in Wichita, Kansas. He has told you that he has been suffering some cash flow problems, but has avoided having to borrow money by letting some of his bills run late. When you raised your eyebrows in response to hearing these comments from Tom, he said, “Don’t worry. I’m really not nervous about this situation in that I have some large orders coming in soon. I’ll use the cash from these orders to catch up on my bills.” Does what Tom told you seem to be a sound strategy for him to follow? What are the downsides associated with how Tom is approaching his cash flow issues?
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