Week 2 Chapter 14-6 (ACCT-311)

Week 2 Chapter 14-6 (ACCT-311) - CLASS CONFERENCES:...

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C LASS C ONFERENCES : C ONCEPTS F OR A NALYSIS Week #2 Chapter 14 (CA 14-6): – Bond Issues Question: Donald Lennon is the president, founder, and majority owner of Wichita Medical Corporation, an emerging medical technology products company. Wichita is in dire need of additional capital to keep operating and to bring several promising products to final development, testing, and production. Donald, as owner of 51% of the outstanding stock, manages the company’s operations. He places heavy emphasis on research and development and long-term growth. The other principal stockholder is Nina Friendly who, as a non- employee investor, owns 40% of the stock. Nina would like to deemphasize the R&D functions and emphasize the marketing function to maximize short-run sales and profits from existing products. She believes this strategy would raise the market price of Wichita’s stock. All of Donald’s personal capital and borrowing power is tied up in his 51% stock ownership. He knows that any offering of additional
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Week 2 Chapter 14-6 (ACCT-311) - CLASS CONFERENCES:...

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