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Written Assignment Unit 6.docx - Written Assignment Unit 6...

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Written Assignment Unit 6Case Study:A local family business is facing a dilemma. Dottie’s Grocery has been a landmark companyin a small city located in the United States. Over the past 45 years, what began as a singlefresh fruit and vegetable store, has now become a full-service grocery store chain with manystores throughout the city. Dottie’s is incorporated with only 7 shareholders, which are allfamily members. They are faced with a decision on how to raise much needed capital tomaintain its current business operations and to allow the possibility of growth in the future.The family believes it needs an additional $23 million dollars. This sum is too large for abank line of credit and no one in the family has additional funding to invest into the company.The family is considering other alternatives.One alternative is to publicly issue debt (corporate bonds), the other alternative is to issuecommon stock to the public. Using your expertise in financial management, you have beenasked by the management team of Dottie’s Grocery to conduct an analysis of the currentsituation and provide a summary of your recommendations. In your summary you must:Describe the process (in detail) of how a public offering occurs.oA chronological account of how most public offerings would be an appropriateformat, although not required.Discuss the impact and implications of each alternative.Explain how each alternative affects control over the company.As a small family business, the internal affairs and finances of the company were wellguarded from the public view by the family.oAs a new IPO, how would the guarding of their finance change?oWhat are the financial reporting effects of this decision?oHow will additional debt impact future earnings?oHow will new stockholders change the management of the company?
1. Describe the process (in detail) of how a public offering occurs.

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Term
Fall
Professor
Dr. Schmidt
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