Introduction When companies face capital funding issues in order to sustain or expand their operations, there are funding options that they could take. When borrowing is not an option or not possible due to credit line limitations, usually, financing can be drawn either through issuing corporate bonds or issuing equity. Whatever the company’s decision for the source of funding, certainly, has implications for the company’s capital structure and operations. Nonetheless, it is prudent for companies considering funding through issuing bonds or stocks to weigh the advantages and disadvantages of each option before embarking through the process of public offering. As an example, this paper will discuss the case of Constantine’s Grocery who requires additional funding to maintain its current operation and possibly to expand the business in the near future. Issuing Stocks to the Public There are several advantages when a company chooses to issue stocks to the public. One advantage is that it doesn't put constraints on cash flow as it does need to pay obligatory capital and …show more content…
Hence, a company may necessarily update its financial system and procedures to comply with what is required when issuing stocks to the public in terms frequency of reporting, the speed of financial close, new and expanded financial disclosures and financial guidance to investors and analysts (PRIORI, n.d.). As mentioned, financial disclosure is part of the requirements necessary for a company to be allowed to issue stocks to the public in compliance with Sarbanes-Oxley Act. This aspect is one of the major trade-offs when going public. Existing owners of Constantine’s Grocery should be willing to open their financial books to the public once they decided to raise capital funding through issuing stocks and assess if they can comply with the rigorous financial reporting timeline