Case 28 Financing Alternatives Essay

Words: 1350
Pages: 6

Company A. Boudoir’s, Inc.:
This company, a retail clothing store with three suburban locations in Atlanta, Georgia, is incorporated, with each of the three Boudoir sisters owning one-third of the outstanding stock. The company is profitable, but rapid growth has put it under severe financial strain. The real estate is all under mortgage to an insurance company, the inventory is being used under a blanket chattel mortgage to secure a bank line of credit, and the accounts receivable are all being factored. With total assets of $7 million, the company now needs an additional $450,000 to finance a building and fixtures for a new outlet.

Company B. Timberland Power & Light:
Since Timberland Power & Light, a major electric
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If the tests are favorable, the company will need an additional $12 million. Copper Mountain Mining’s common stock is currently selling at $11, while the company is earning approximately $1 per share. Other firms in the industry sell at from 8 to 13 times earnings. Copper Mountain’s debt ratio is 30 percent, compared to an industry average of 35 percent. Total assets at the last balance sheet date were $120 million.

Company F. Bull Gator Saloon and Dance Hall:
Robert Radcliffe, a professor at the University of Florida, is an avid country-and-western music fan and a square dancer. He has just learned that a recently developed downtown shopping and entertainment center still has a lease available for the original, renovated building of the First National Bank of Gainesville. The bank outgrew the building in the late 1950s, and the large open spaces and high ceilings would be ideal for a country-and-western nightclub. Radcliffe knows the market well and has often noted the lack of a real “kicker bar” in Gainesville; the closest being in Starke, about 25 miles from Gainesville. Radcliffe believes that if he can obtain approximately $50,000 for a sound system and interior decorations, he can open a small but successful operation in the old bank building. His liquid savings total $15,000, so Radcliffe needs an additional $35,000 to open the proposed nightclub.

Company G. Golden Gate Aircraft