Company F is in restaurant business which is established in 28 locations in country U, two in country M and ten in country B. It is high-end restaurants which competes with top players in the industry. It was started by two sets of brothers namely Person JC and Person AC and Person JO and Person AO. The company was started as a small one by these brothers in country B which later emerged as a big success and entered into country U. In 2005, Person JO and AO sold their shares to Person JC and AC and the company continued to expand. Later Person JC and AC sold their shares for $426 million to TL partners. TL partners successfully expanded the firm and in 2015 the company went for an IPO, to its outstanding debts, raising $88.2 million at a price of $20 per share which was well above $16-$18 per share. Before the company entered the public, there were other three companies namely company CC, company CB and company BSS. There are some factors for company F which the investors will look for investing. The company had paid its debt through IPO which led the firm with poor cash handling. The company decides to bring a specialized chef from country B for which visa had been suspended and revoked but there are not theoretical measures to gauge the rise and falls in the stock market. To determine: Whether Person X will consider investing in company F and provide reasons.

Question

Want to see the full answer?

Answer 1

Question

Chapter 17, Problem 17.27C

Summary Introduction

Case summary:

Company F is in restaurant business which is established in 28 locations in country U, two in country M and ten in country B. It is high-end restaurants which competes with top players in the industry. It was started by two sets of brothers namely Person JC and Person AC and Person JO and Person AO.

The company was started as a small one by these brothers in country B which later emerged as a big success and entered into country U. In 2005, Person JO and AO sold their shares to Person JC and AC and the company continued to expand. Later Person JC and AC sold their shares for $426 million to TL partners.

TL partners successfully expanded the firm and in 2015 the company went for an IPO, to its outstanding debts, raising $88.2 million at a price of $20 per share which was well above $16-$18 per share. Before the company entered the public, there were other three companies namely company CC, company CB and company BSS.

There are some factors for company F which the investors will look for investing. The company had paid its debt through IPO which led the firm with poor cash handling. The company decides to bring a specialized chef from country B for which visa had been suspended and revoked but there are not theoretical measures to gauge the rise and falls in the stock market.

To determine: Whether Person X will consider investing in company F and provide reasons.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

As a young Graduate from the University of Professional Studies, a Small and Medium Enterprise Owner approached you and wanted you to help him/her develop a comprehensive Business Plan to enable the Business go for a loan facility with the Access Bank. What are the salient Elements that constitute a well-developed Business plan that can help the Small and Medium Enterprise to acquire the loan facility?

fixed obligations, whether they are operating costs or capital costs, when incurred allow a company to leverage small changes in one area to greater profitability: in a discussion Compare the concepts of operating leverage and financial leverage and discuss how does a company create the conditions necessary to have a greater multiplier effect on its earnings.

What is the cheapest source of funds? When all other sources turn down your request for funding, what source is most likely to say yes? Why is this the case? Is the entrepreneur exploiting a personal relationship with this potential source of capital? What are the consequences of using this source of capital if the business goes bankrupt?