Body Builders Corporation is opening a chain of five health clubs in the Minneapolis area. Body Builders's marketing manager has suggested a marketing plan designed to generate new memberships. The plan would allow new members to delay payment for the first three months' membership and pay at the end of the first quarter. Thus, the cash flow from membership fees will not occur for three months.

Identify the implications of this marketing approach for the cash flows of Body Builders.

Multiple Choice

• It will not create significant cash flow problems for Body Builders Corporation.
• It will create significant cash flow problems for Body Builders Corporation.