Complete the Chapter 18 Mini-case on page 788 in your textbook. After reading the case, you will complete questions A through D only. In addition to your textbook, please provide at least three scholarly sources to support your answers.
Use at least three references from outside the course material; one reference must be from EBSCOhost. Text book, lectures, and other materials in the course may be used, but are not counted toward the three reference requirement.
Cite all reference material (data, dates, graphs, quotes, paraphrased words, values, etc.) in the paper and list on a reference page in APA style.
References must come from sources such as scholarly journals found in EBSCOhost or on Google Scholar, government websites and publications, reputable news media (e.g. CNN , The Wall Street Journal, The New York Times) websites and publications, etc. Sources such as Wikis, Yahoo Answers, eHow, blogs, etc. are not acceptable for academic writing.
Mini Case
Randy’s, a family-owned restaurant chain operating in Alabama, has grown to the point that expansion throughout the entire Southeast is feasible. The proposed expansion would require the firm to raise about $18.3 million in new capital. Because Randy’s currently has a debt ratio of 50% and because family members already have all their personal wealth invested in the company, the family would like to sell common stock to the public to raise the $18.3 million. However, the family wants to retain voting control. You have been asked to brief family members on the issues involved by answering the following questions.
Why would a company consider going public? What are some advantages and disadvantages?
Requirements: 750 -1250 words
Answer preview
measures established by the regulators (Fjesme & Norli, 2011). Furthermore, going public improves its market presence, creating more growth opportunities. On the downside, going is an expensive and time-consuming process, creating challenges for small businesses to become IPOs. The expenses incur since the company has to pay audit fees, professionals in the accounting oversight committees, and investors in the relations departments. Still, going public reduces a firm’s autonomy compared to private placements since every shareholder plays a significant role in the decision-making process.
Conclusion
In conclusion, a company can raise funds using different approaches, such as equity financing through various forms, including common or preferred stock. Debt financing is another applicable option, which requires a firm to identify a trustworthy and reliable creditor who can provide a loan with reasonable interest rates (Hofstrand, 2022). A firm can also raise funds through private or public offerings; however, the management should evaluate the pros and cons of each approach before deciding the direction to take.
