Reference no: EM132949283
Case Study:
A local family business is facing a dilemma. Dottie's Grocery has been a landmark company in a small city located in the United States. Over the past 45 years, what began as a single fresh fruit and vegetable store, has now become a full-service grocery store chain with many stores throughout the city. Dottie's is incorporated with only 7 shareholders, which are all family members. They are faced with a decision on how to raise much needed capital to maintain its current business operations and to allow the possibility of growth in the future. The family believes it needs an additional $23 million dollars. This sum is too large for a bank line of credit and no one in the family has additional funding to invest into the company. The family is considering other alternatives.
One alternative is to publicly issue debt (corporate bonds), the other alternative is to issue common stock to the public. Using your expertise in financial management, you have been asked by the management team of Dottie's Grocery to conduct an analysis of the current situation and provide a summary of your recommendations. In your summary you must:
Question 1: Describe the process (in detail) of how a public offering occurs. A chronological account of how most public offerings would be an appropriate format, although not required.
Question 2: Discuss the impact and implications of each alternative.
Question 3: Explain how each alternative affects control over the company.
Question 4: As a small family business, the internal affairs and finances of the company were well guarded from the public view by the family.
Question 5: As a new IPO, how would the guarding of their finance change?
Question 6: What are the financial reporting effects of this decision?
Question 7: How will additional debt impact future earnings?
Question 8: How will new stockholders change the management of the company?
How much is the net ending balance of property
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What is the total inventory cost
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How each of the transactions would be treated
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What the total cost of the units completed and transferred
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How will additional debt impact future earnings
: As a small family business, the internal affairs and finances of the company were well guarded from the public view by the family.
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What is the total cost
: Ordering cost and Carrying cost and Total Cost of inventory. What is the total cost, including purchase of Price of the Inventory
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What is the most common budgeting process
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Prepare all appropriate journal entries for the costs
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What is the balance of equity section to be
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