Natalie Pendlay, the chief financial officer of Mullins Inc., is considering the options available to her for financing the company’s new plant. Shortterm interest rates right now are 6%, and long-term rates are 8%. The company’s current ratio is 2.2:1.

If she finances the new plant with short-term debt, the current ratio will fall to 1.5:1. Briefly discuss the issues that Natalie should consider.AppendixLO2