Final answer:
The best and least expensive method for a durable-goods manufacturer to overcome cash flow problems is to reinvest profits back into the company. This can boost production and sales, ultimately improving cash flow, provided the firm is already profitable and reinvestment exceeds the equipment's depreciation.
Step-by-step explanation:
For a durable-goods manufacturing company experiencing cash flow problems, practicable steps can be taken to alleviate this challenging period without heavy reliance on expensive external financing. One of the best and least expensive ways to navigate through financial difficulties is by reinvesting profits back into the company. This approach involves improving or expanding current facilities, purchasing technology, or hiring additional labor, thereby increasing production capabilities, which in turn can lead to higher sales and an enhanced cash flow in subsequent periods.
However, this strategy requires that the company is already profitable and that the reinvested profits exceed the depreciation on the new equipment. If the situation necessitates external funding, options include taking out a loan, issuing bonds, or selling stock. Each of these comes with its drawbacks, such as scheduled interest payments or diluting company ownership, which makes careful consideration of the best choice essential.