Question

An amusement park operates daily from Victoria Day to Labour Day. In addition, the park is open Fridays, Saturdays, and Sundays throughout May and September. The park finds that the revenue produced from weekend-only operations in May and September is not enough to cover the expenses they incur in those months. Which of the following circumstances requires the amusement park to seek outside financing to cover its short-term cash shortages?

a. seasonal cash flows
b. a positive cash-flow cycle
c. cash shortfall due to growth
d. long-term financing

Answer 1

The amusement park needs to seek outside financing to cover its short-term cash shortages due to seasonal cash flows.

Step-by-step explanation:

The amusement park needs to seek outside financing to cover its short-term cash shortages in the circumstance of seasonal cash flows. In this case, the revenue generated from weekend-only operations in May and September is not sufficient to cover the expenses incurred during those months. As a result, the park experiences a cash shortfall during these periods and requires external funding to bridge the gap. This is a common challenge for businesses that operate seasonally or have fluctuating cash flows throughout the year.