Question

Kurt leased a small building and converted it into a hockey supply shop. He had assumed that he could run a successful business if he had enough money to get started. However, his business faces seasonal variations in sales. He now finds it difficult to meet the day-to-day expenses of the business. Which problem is Kurt's business facing?

a.competition

b.lack of startup capital

c.bureaucracy

d.inability to cope with growth

e.undercapitalization

Answer 1

Answer:

The correct answer is letter "E": undercapitalization.

Explanation:

Undercapitalization refers to the situation in which an organization is unable to generate enough funds to cover its expenses. This leads to companies being unable to pay their creditors, thus, they have no other option but to request for loans to keep the business up and running. Small companies are frequently undercapitalized.