The directors of the Palazine Company are seeking funding of

£50m to finance an expansion programme. The summarized financial statements for the most recent year are set out below:

The following suggestions have been made for raising the additional finance. You are required to explain the effects of each of the suggestions and to comment on their practicability.
The company could:
i issue more debentures;

ii make a sale and leaseback arrangement on its premises;
iii sell its investments (although some directors object to this as it would involve a loss of £15m);
iv reduce inventories by one half;
v halve the period that receivables are allowed to pay (all sales are on credit);
vi extend the period for paying payables by 50 per cent;

vii use the reserves;

viii issue more ordinary shares;

ix obtain a bank overdraft.

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Income statement for the year ended 31 December year 6 Sales Cost of sales Gross profit Distribution costs Administration expenses Operating profit Debenture interest Net profit before taxation Taxation Net profit after taxation Dividends Retained profit for year Statement of financial position as at 31 December year 6 Non-current assets Land and buildings (market value 55m) Plant and machinery Investments at cost (market value 30m) 000 120,000 90,000 30,000 8,000 12,000 (20,000) 10,000 (5,000) 5,000 (3,000) 2,000 (1,000) 1,000 000 45,000 18,000 45,000 108,000