32 Ruth purchased a corner dairy for $200 000. The vendor took

$120 000 immediately as part-payment, a sum which Ruth had obtained as a long-term loan from her aunt. The balance of the purchase price was due in four consecutive monthly instalments of $20 000 each. Ruth paid this from the cash flow of the business; however, this meant that most of Ruth’s suppliers’ accounts could not be paid. Assuming that the dairy generated no profit in the first four months of operations, effectively what proportions of debt and equity did Ruth use to finance the purchase? Do you foresee any potential problems for Ruth?