Urban Outfitters Continuing Case Studies

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Financing a Business


Urban Outfitters Continuing Case Study

Part 3: Financing A Business

Sylvia Taylor

Instructor: Joyce Davis

Introduction to Business

November 20, 2009

Urban Outfitters Continuing Case Study

Part 3: Financing A Business

The following questions are from this case study on Urban Outfitters and are answered as follows:

Question: Explain what Benjamin Franklin means by “necessity never made a good bargain”.

Explain why this is true.

Answer: The statement “necessity never made a good bargain” was taken from Poor Richard,

1735 … William, because his Wife was something ill, Uncertain in her Health, indifferent still,

He turn’d her out of Doors without reply: I ask’d if he that Act could justifie. In Sickness and in

Health, says he, I’m bound To keep her; when she’s worse or better found I’ll take her in again:

And now you’ll see, She’ll quickly either mend or end, says he. The Family of Fools is ancient.

Necessity never made a good bargain. If Pride leads the Van, Beggary brings up the Rear.

There’s many witty men whose brains can’t fill their bellies. Weighty Questions ask for

deliberate Answers.1 Mr. Franklin was discussing his wife’s illness in this statement but I believe

he was saying that even though somethings may seem necessary at the time, it may not turn out

to be a good bargain in the end. Like other firms with a steady cash flow, Urban Outfitters wanted to put its money to work by investing in liquid assets that offered an attractive rate of return. The booming financial markets of the early twenty-first century lured many financial managers into overconfidence, resulting in overly risky financial decisions. Many firms invested heavily in the complex and risky financial instruments…and suffered the consequences. Fortunately, Urban Outfitters didn’t fall into this trap. Caution and cash, patience and liquidity paid off in a time when things...