The owner of a small furniture manufacturer is retiring and is interested in selling the business to her fifteen employees. The firm owns all its building and equipment and has inventory of wood, finished products it values at $50,000, and an existing mortgage loan with a $100,000 balance. The owner is asking $1,000,000 for the business and all its assets. Assuming the employees do not simply have $1M cash on hand, identify and explain which source(s) of financing would support the transaction?
The owner of a small furniture manufacturer is retiring and is interested in selling the business to her fifteen employees. The firm owns all its building and equipment and has inventory of wood, finished products it values at $50,000, and an existing mortgage loan with a $100,000 balance. The owner is asking $1,000,000 for the business and all its assets. Assuming the employees do not simply have $1M cash on hand, identify and explain which source(s) of financing would support the transaction?
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter14: Statement Of Cash Flows
Section: Chapter Questions
Problem 33E: Stillwater Designs is a private company and outsources production of its Kicker speaker lines....
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The owner of a small furniture manufacturer is retiring and is interested in selling the business to her fifteen employees. The firm owns all its building and equipment and has inventory of wood, finished products it values at $50,000, and an existing mortgage loan with a $100,000 balance. The owner is asking $1,000,000 for the business and all its assets.
Assuming the employees do not simply have $1M cash on hand, identify and explain which source(s) of financing would support the transaction?
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