A company produces goods that are very profitable. They are currently developing a new product line. Why must it take care to ensure that it has sufficient cash on hand to meet its obligations?

1. profits from the current sales will be lost when returned to the shareholders in the form of dividends

2. the company will always build up debt which must be repaid in order to bring the new models to market

3. this will enable the company to maintain a high share price for its stock

4. new products usually require a lot of money to develop and bring to market before they generate revenue

5. equity must be raised to finance the development of new models to replace the exisiting models