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 availablehere. 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

Considering the size of the investment ($200,000) how does this impact the financial statements reviewed in Unit 1?

• Provide a narrative about private debt, private transfer of partial ownership, private transfer of entire ownership, public debt issuance, and public equity offering.
• Provide a discussion of the impact of each alternative which would include issues of structure and cost of capital.
• The narrative will discuss the impact of an infusion of capital of $200,000 on the financial statements.