Shalini, after acquiring a degree in Hotel Mangement and Business Administation took over her family food processing company of manufacturing pickles,jams and squashes. The business was established by her great grandmother and was doing reasonably well. However the fixed operating costs of the business were high and the cash flow position was weak. She wanted to undertake modernisation of the existing business to indroduce the latest manufacturing processes and diversify into the market of chocolates and candites. she was very enthusiatic and approached a finance consultant, and expansion programme. He also informed her that the stock market was going thorugh a bullish phase.
(a) Keeping the above considerations in mind, name the source of finace Shalini should not choose for financing the modernisation and expansion of her food processing business. Give one reason in support of your answer.
(b) Explain any too other facotrs, apart from those staed in the above situation, which Shalini should keep in mind while taking this decision.
