Question

A new small business, Underwater Wildlife, has opened to sell tours of underwater sites around the country and in South America. However, money has to be paid up front by the Underwater staff to book hotels and other travel arrangements before its clients have paid for the tours. That means Underwater is facing a potential a.insurance difficulty. b.cash-flow problem. c.inventory-flow problem. d.business plan crunch. e.employee expansion task

Answer 1

Answer: Cash flow problem

Explanation: In simple words, cash flow problem refers to a situation when an entity faces difficulty in controlling the outflow in relation to their inflow. This can occur mainly due to two factors- low profit or losses and over investment.

In the given case, the company is facing the problem of over investment as they are not getting any inflow but have to bear the outflow for effectively operating their business.

Hence from the above we can conclude that the correct option is B.