In this paper, please discuss the following case study. In doing so, explain your approach to the problem, support your approach with references, and execute your approach. Provide an answer to the case studys question with a recommendation.

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 available here. 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?

Superior papers will explain the following elements when responding to the assignment question:

• 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.

balance sheet

ASSETS		2014		2013
CURRENT ASSETS
Cash		456,500		222,400	Cash increase - due to no dividends paid in 2014
Receivables		3,936,400		3,320,000
Inventory		89,800		100,200
Other assets		119,500		84,300
Total current assets		4,602,200		3,726,900	Current ratio 2013: 1.21
					Current ratio 2014: 1.47
LONG TERM ASSETS
Note Receivable		380,600		280,700	Some additional debt acquired in 2014
Equipment (net of depreciation)		975,000		1,017,800
Total long term assets		1,355,600		1,298,500
TOTAL ASSETS		5,957,800		5,025,400
LIABILITIES AND STOCKHOLDERS' EQUITY					Debt ratio 2013:		0.7
					Debt ratio 2014:		0.6
CURRENT LIABILITIES
Accounts payable		2,783,100		2,805,700
Note payable (current maturities)		177,550		172,550
Other accrued liabilities		165,300		114,600
Total current liabilities		3,125,950		3,092,850
LONG TERM LIABILITIES
Notes payable (long term)		354,800		354,800
Long term accrued liabilities		289,550		220,250
Total long term liabilities		644,350		575,050
TOTAL LIABILITIES		3,770,300		3,667,900
STOCKHOLDERS' EQUITY
Common stock		300,000		300,000
Retained Earnings		1,887,500		1,057,500
Total stockholders' equity		2,187,500		1,357,500
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY		5,957,800		5,025,400

income statement

		2014		2013
					Comments
Service Contract Revenues		9,700,000		6,295,400	Increase in contracts
Service Contract Costs		(7,503,100)		(4,957,800)
Gross Profit		2,196,900		1,337,600	Gross profit margin 2013: 21.2%
					Gross profit margin 2014: 22.6%
General and Administrative Expenses		(896,000)		(756,000)
Operating Income		1,300,900		518,600	Increase in profit - see above comment
Gain on sale of equipment		59,900		7,700
Interest expense		(69,500)		(70,800)
Other expense		(9,600)		(63,100)
Income before taxes		1,281,700		455,400
Taxes		(451,700)		(300,900)
Net Income		830,000		154,500	Increase in net income from 2013-2014
Retained Earnings, Beginning Balance		1,057,500		1,053,000
		1,887,500		1,207,500
Less: Dividends paid		0		(150,000)	No dividend paid in 2014
Retained Earnings, Ending Balance		1,887,500		1,057,500