A business would like to invest in a new product, but they are short on extra cash for such purposes. They are in a good position as a business, though: Their employee costs are average, their market share is relatively high, and they have enough inventory on hand to last for months. What would be one good solution if they want to find extra cash for the new product?

A.
Raise prices on their inventory even if it takes longer to sell it.

B.
Fire at least one employee.

C.
Liquidate some inventory to increase cash flow.

D.
Cut wages for all employees.
C. Liquidate some inventory to increase cash flow.
C. Liquidate some inventory to increase cash flow.
Liquidating some inventory would be a good solution to find extra cash for the new product. By selling off excess inventory, the business can generate immediate cash inflow and free up space for the new product. This approach avoids the negative consequences of raising prices, firing employees, or cutting wages, which could have adverse effects on the business's reputation and employee morale.
The most appropriate solution in this scenario would be option C, liquidating some inventory to increase cash flow.
Explanation:
Liquidating inventory refers to the process of selling off excess or unused inventory in order to generate cash. In this case, since the business already has enough inventory on hand to last for months, selling a portion of it can be an effective way to obtain extra cash to invest in the new product.
Raising prices on inventory (option A) might increase profit margin per unit, but it may also slow down sales, potentially impacting overall cash flow. This might not be the best approach as the goal is to generate cash quickly.
Firing employees (option B) could potentially reduce employee costs, but it may also have negative consequences such as lower productivity or decreased morale among the remaining employees. This solution should be considered as a last resort and only if there are clear indications that the business is overstaffed.
Cutting wages for all employees (option D) could lead to dissatisfaction and reduced employee motivation, potentially impacting overall business performance and long-term success. It may also be illegal if wage reductions violate employment contracts or local labor laws.
Therefore, liquidating some inventory (option C) to increase cash flow would be the most appropriate and feasible solution in this situation, as it allows the business to generate extra cash without significantly impacting other areas of the business.