Case Study:

The Great Service Cleaning and Maintenance Company requires a capital infusion of $200,000. It is currently a closely held corporation with less than 50 shareholders. Although the shareholders are not all related to each other, they all know each other and they view the business as a family business. Please refer to the financial statements availablebelow(two attachements) The financial statements should be familiar to you because you performed a basic financial analysis of the company in Unit 1 of this course.

A number of alternatives are available to the company. It can:

• Obtain private debt financing
• Seek out a private investor(s) who would be willing to share ownership
• Seek out offers for a private buy-out
• Issue public debt (corporate bonds)
• Issue public common stock

In this paper, discuss the impact and implications of each alternative. It would be appropriate to include the topics and areas of discussion you covered in the case study in Unit 6 so long as it is applied to this specific case. Considering the size of the investment ($200,000) how does this impact the financial statements reviewed in Unit 1?

Balance Sheet Income Statement Sheeta ASSETS 2014 2013 CURRENT ASSETS Cash 456 5m) 111 400 Cash increase - due to no divide Receivables 1 936 400 3 120 am Inventory 89 800 100 200 Other assets 11'? 500 84 300 Total current assets 4 602 200 3 726 900 Current ratio 101:: 1.21 Current ratio 1014: 1.47 LONG TERM ASSETS Note Receivable 380 600 180 700 Some additional debt acquired Equipment (net of depreciation] 975 000 1 017 800 Total long ten'n assets 1 355 600 1 19B 500 TOTALASSETS 5 957 500 5 025 400 LIABILI11ES AND STOCKHOLDERS' EQUITY Debt ratio 201]: 0,? Debt ratio 1014: 0,6 CURRENT LIABILITIES Accounts payable 1 783 100 2 805 700 Note payable {current maturities) 171 550 172 550 Other accrued liabilities 165 300 114 600 Total current liabilities J 125 950 3 092 850 LONG TERM LIABILITIES Notea payable (long term] 354 am 354 300 Long term accrued liabilities 289 550 210 250 Total long term liabilities 644 350 575 050 TOTAL LIABILITIES 1 770 300 3 667 900 STOCKHOLDERS EQUITY Common stock 300 000 100 am Retained Earnings 1 ES? 5D 1 057 500 Total stockholders' equity 1 187 SUD 1 357 500 TOTAL LIABILITIES AND STOCKHOLDERS EQUITY 5 957 W0 5 015 400 Nothing selected. Seiect an ohiect In Format. | Balance Sheet Innntnetstawnent v_ Sheet?! 2014 201 3 Comments Service Contract Revenues 9 100 am) 6 295 4110 Increase it Service Contract Costs (7 503 100) [4 957 800) Gross Prot 1 196 Dan 1 331 mu Gross prof Gross prof General and Administrative Expenses (596 m0) (756 can) Operating Income 1 300 900 518 6110 Increase 2t Gain on sale of equipment 59 mo 1 Tan Interest expense [69 500) (70 800) Other expense [9 m0) [6: 1m) Income before taxes 1 281 700 455 400 Taxes {451 700) (300 900) Net Income B30 000 154 500 Increase El Retatned Earnings, Beginning Balance 1 057 500 1 053 000 1 BS? 500 1 207 500 Less: Dividends paid 0 {150 000) No divider Retained Earnings, Ending Balance 1 587 500 1 I157 500 )~ Nothing selected. Select an ohieot io Format