Benjamin Franklin's quote "necessity never made a good bargain" means that those who are desperate will pay above market prices. Cash reserves improve company performance by allowing profitable investment of liquid assets. Some companies became too involved in risky financing practices during the 21st century boom and overextended themselves, losing everything when markets turned. After reading the case, the author would be more inclined to use debt to expand their business if the market was strong and financing was done correctly, with low risk and fixed repayment terms.

1. Urban Outfitters Continuing Case Study
Part 3: Financing a Business
Review Questions
1. What did Benjamin Franklin mean by “necessity never made a good
bargain?” Why?
 If a person needs a product — they will be willing to pay above & beyond
the normal asking price. Especially if the product is a commodity.
 Also ── I believe the message Benjamin Franklin is trying to send → plan
for the expected & be prepared for the unexpected ─ for there is no time
for bargaining with the absolute need for now.
2. How does “cash in the bank” improve company performance?
 By putting money to work — by investing in liquid assets that offer an
attractive rate of return.
3. Give examples of companies that became too involved in risky finance.

2.  When the booming financial markets ── during the 21st century this lured
financial mangers into overconfidence —— resulting in overly risky
decisions.
 Firms invested heavily & pretty much lost everything ── they
couldn’t pay for their homes, cars, & not even the basic necessities.
4. After reading this case, would you be more or less inclined to use debt to
expand your business?
More inclined ── if the business needed money and the market was strong & I
financed correctly there would be low risk
 If I had to choose ── I would want to owe money to a lender and pay
back in fixed amounts.