1. Assume that Catherine Mahugu of Soko plans on expanding her business to accommodate more product lines. She is considering financing here expansion in one of two ways: (1) contributing more of her own funds to the business or (2) borrowing the funds from her bank.

a. Identify at least 2 issues that Catherine should consider when trying to decide on the method for financing the expansion. What are the pros and cons of each method?

b. Can you think of 2 other ways to finance this expansion? What are the pros and cons of each method?

2. Lisa Corentine is an aspiring entrepreneur and your friend. She is having difficulty understanding the purposes of each financial statement and how they fit together across time.

a. Write a one-page memo to her explaining the main purposes of each financial statement and how they are linked across time.