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A manufacturer is experiencing a range of problems - OCR - GCSE Business - Question 3 - 2020 - Paper 1
Question 3
A manufacturer is experiencing a range of problems. Which of the following problems would be classed as a 'liquidity problem'? A. A breakdown on the production lin... show full transcript
Worked Solution & Example Answer:A manufacturer is experiencing a range of problems - OCR - GCSE Business - Question 3 - 2020 - Paper 1
Step 1
Being short of funds to pay suppliers
Answer
A liquidity problem refers to a situation where a business does not have enough cash or readily accessible funds to meet its short-term obligations. In this context, option B specifically highlights being short on funds to pay suppliers, which is a clear indicator of liquidity issues. When a manufacturer cannot pay its suppliers on time, it may lead to halted production, loss of creditworthiness, and potentially more severe financial difficulties. Therefore, option B is the correct choice.