Sign In
Not register? Register Now!
Essay Available:
Pages:
6 pages/β‰ˆ1650 words
Sources:
5 Sources
Style:
APA
Subject:
Literature & Language
Type:
Essay
Language:
English (U.S.)
Document:
MS Word
Date:
Total cost:
$ 21.6
Topic:

De La Portilla Food Stores: First Stock Sale Process

Essay Instructions:

In 5 to 8 pages, write a report based on the following scenario:
de la Portilla food stores, a family owned grocery store chain headquartered in Refugio, Texas, is considering a major expansion. The proposed expansion would require de la Portilla to raise $80 million in additional capital. Because de la Portilla currently has a debt ratio of 50 percent, and because the family members have all their funds tied up in the business, the owners cannot supply any additional equity. So the company will have to sell shares of the company to the public. However, the family wants to insure they retain control of the company. This would be de la Portilla’s first stock sale, and the owners are not sure just what would be involved. Therefore, they have asked you to research the process and to help them decide exactly how to raise the needed capital. In doing so, you should answer the following questions:
1. What are the advantages to de la Portilla to finance with shares rather than bonds? What are the disadvantages of using shares?
2. Are the shares of de la Portilla food stores currently publicly held or privately owned? Would this situation change if the sale shares were made?
3. What are classified shares (stock)? Would there be any advantage to de la Portilla of designating the shares currently outstanding as “founders’ shares”? What type of common shares should de la Portilla sell to the public to allow the family to retain control of the business?
4. What does the term going public mean? What would be the advantages to the de la Portilla family of having the firm go public? What would be the disadvantages?
5. What does the term listed stock mean? Do you believe de la Portilla shares would be listed shortly after the company goes public? If not, where would the shares trade?
WRITING GUIDELINES:
• The length of this paper should be between 5-8 pages (not including the title page, table of contents or reference page) in APA formatting, double spaced, with 1-inch margins and 12 point Times New Roman font.
• Your paper must have an INTRODUCTION and CONCLUSION paragraphs.
• Please submit in a word document and NOT pdf version.
• You should use headings and subheadings to organize your paper.
• Use at least 5 academic, scholarly or professional practitioner sources, and minimum 5 in-text CITATIONS are required.
• You must cite and reference all texts used, including page numbers to avoid plagiarism.
• Paper should be proofread for spelling and grammar mistakes
• Please review the SLOs mentioned below and synthesize
them into your research paper.
The following resources are NOT ACCEPTABLE as citations for this paper:
• Wikipedia.com
• Ehow.com
• Dictionary.com
• About.com
• Smallbusiness.chron.com
• Diffen.com
• Yourbusiness.azcentral.com
• Tjmarino.com
• Investopedia.com
• Boundless.com and Lumen
• CourseHero.com
• Chegg.com
• Difference between
-----------------------------------------------------------------------------------------------------------
SLOs:
• SLO1: Appraise the investment environment and financial instruments.
• SLO2: Illustrate the concepts of the mutual fund and securities trade
• SLO3: Evaluate risk, return, and historical records.
• SLO4: Interpret the concept of efficient market hypotheses.
• SLO6: Evaluate behavioral finance, technical analysis, and decision making
• SLO7: Evaluate and interpret financial statements.

Essay Sample Content Preview:

De La Portilla Food Store
Author Name
Institution Affiliation
De La Portilla is a fast food chain owned by a family. Its headquarters are based in Refugio, Texas. The family is currently planning to expand the business, and I have been asked to research the process and to help them decide how to raise the required capital. As far as I have understood from its business model, De La Portilla needs to raise a minimum of $80 million in terms of extra capital. Currently, the company’s debt ratio is 50 percent, and the family that owns this business has all of its funds tied up. This means they are now not able to invest anything or cannot supply additional equity. The company might have to sell the shares to the public. In the meantime, the owners want to ensure that they have full control over the business. It would be the first stock sale of De La Portilla, and the owners have no idea of what needs to be involved.
1. What are the advantages to de la Portilla to finance with shares rather than bonds? What are the disadvantages of using shares?
I think that De La Portilla should finance wit shares rather than bonds because this can benefit the business in the long run (Valdez, 1997). I would like the owners of this company to know that selling the share for more than they paid for is called Capital Gain. It takes place when a person experiences a significant rise in share prices. Another benefit the company would get is Dividend. This is a type of cash reward given to the shareholder as part of the profit earned through the business at the end of every financial year. It means De La Portilla can maximize its chances of earning good income after every financial year based on how the owners of this company plan to invest in shares.
By nature, shares that get listed are a liquid product, and it is very easy to buy and sell them over an exchange platform. It means the family will not have to face any problem and trading on an exchange will allow them to sell part of the share parcels other than redeeming the whole lot. Another prominent benefit is that some of the listed shareholder companies belonging to sectors like retail, entertainment, financial services, and hospitality offer great discounts to the shareholders whenever they buy goods or services from companies like De La Portilla as well as from their affiliates.
As far as the disadvantages of using shares are concerned, I would like De La Portilla’s owners to know that they might lose the entire investment. This is based on how the company performs. If the performance of De La Portilla is not up to the mark, investors may sell its share(s), causing the stock price to come down.
2. Are the shares of de la Portilla food stores currently publicly held or privately owned? Would this situation change if the sale shares were made?
As this is the first time De La Portilla is selling its shares outside the family, it is easy to predict that the shares are not being traded in the stock exchange and hence they are privately held (Wah et al. 2018). When the company goes out to sell its share publically, its characteristics will be changed, and the form of shares will be changed from privately-held to publically-owned.
In the meantime, I would like to brief ...
Updated on
Get the Whole Paper!
Not exactly what you need?
Do you need a custom essay? Order right now:
Order

πŸ‘€ Other Visitors are Viewing These APA Essay Samples:

HIRE A WRITER FROM $11.95 / PAGE
ORDER WITH 15% DISCOUNT!
Order Now