Finance expansion during the current fiscal year

Assignment Help Financial Management

Reference no: EM13924686

Schooner Yachts is a closely held company that was founded in 1970 by Russ Breaker to build a top-quality line of sailboats. The company’s debt ratio is 48 percent, compared to an average ratio of 36 percent for sailboat companies in general. The stock is owned in equal parts by ten individuals, none of whom is in a position to put additional funds into the business. Sales for the most recent year were $12 million, and earnings after taxes amounted to $720,000. Total assets, as of the latest balance sheet, were $9.6 million.

Schooner Yachts needs an additional $4 million to finance expansion during the current fiscal year. Given the worldwide growth in leisure-time activities and interest in sailing in particular, the firm can anticipate additional outside capital needs in the years ahead.

Should the company use private placement of debt, public offering of debt or ordinary shares public offering to raise additional funds? Explain your answer.

Reference no: EM13924686

Questions Cloud

Alternative strategies for kudler fine foods : Kudler Fine Foods (KFF) has a vision and needs to use strategic planning to grow. The strategic section involves a constant evaluation of internal and external environments and how it affects KFF's future. Team B will present five alternatives for..

The margin of safety : Assume Sparkle Co. expects to sell 150 units next month. The unit sales price is $90, unit variable cost is $40, and the fixed costs per month are $5,000. The margin of safety is:

Some of the ethical responsibilities and obligations : List a few of the issues and considerations businesses should have when it comes to the selection of long-term investments and how those issues impact the various financial statements.

How many units must be sold to break-even : Tim Taylor has written a self improvement book that has the following cost characteristics: Selling Price $16.00 per book Variable cost per unit: Production $4.00 Selling & administrative 2.00 Fixed costs: Production $90,400 per year Selling & admini..

Finance expansion during the current fiscal year : Schooner Yachts is a closely held company that was founded in 1970 by Russ Breaker to build a top-quality line of sailboats. The company’s debt ratio is 48 percent, compared to an average ratio of 36 percent for sailboat companies in general. Schoone..

Contribution margin ratio : Winny's Office Furniture has a contribution margin ratio of 16%. If fixed costs are $187,300, how many dollars of revenue must the company generate in order to reach the break-even point?

Individual assignment-environmental scan and summary : When conducting an environmental scan, it is most beneficial for Kudler to utilize both an internal environmental scan and an external environmental scan. In order to effectively conduct an internal environmental scan, it is most appropriate for K..

The market rate of interest for similar investments : Ivy Inc. issued callable bonds with a stated interest rate of 5 percent. The bonds were callable at 102. At the date of issue, the market rate of interest was 6 percent for similar investments.

Company as the corporate controller : You've just been hired onto ABC Company as the corporate controller. ABC Company is a manufacturing firm that specializes in making cedar roofing and siding shingles. The company currently has annual sales of around $1.2 million, a 25% increase fr..

User Account

All Pages