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Dottie's Grocery Chain Company Case Summary

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Module 6 - Written Assignment: Corporate Bond vs Public Stock
Case Study - Dottie's Grocery

Anonymous
Masters of Business Administration: University of the People
BUS-5111 Financial Management
Professor Dinesh Tandon
May 18, 2023

Background: Dottie’s Grocery Chain company
Dottie's Grocery chain is a local family business in the United States. They've grown from a single fresh fruit and vegetable store to a full-service grocery store chain over the span of 4 decades and is a notable company in the community. The only shareholders of Dottie's Grocery are made up of 7 shareholders who are all members of the family. They're facing a challenge in that they need $23 million to maintain their operations and potentially grow …show more content…

If Dottie's Grocery decides to publicly issue debt through corporate bonds, they can get the financing they need to fuel their growth. But they must to pay it back with interest and be mindful of the risks and expectations of the bondholders (Arnold & Lewis, 2019). The following are the impact and implications of issuing corporate bonds.
Money in the Bank
By issuing corporate bonds, Dottie's Grocery can raise a hefty amount of cash. This capital can be used to fuel their expansion plans, invest in new stores, upgrade technology, or even pay off existing debt (Lowry et al., 2020). It is akin to getting a loan from a many people instead of just one bank. Corporate bonds may be an attractive option for Dottie’s Grocery because the funds they need cannot be borrowed from any one bank.
Payback Time
Dottie's Grocery would have to pay back the borrowed amount plus interest over a specified period. When money is borrowed, a promise to pay it back with interest is usually done.
Interest …show more content…

These interest payments are usually tax-deductible, providing some relief to the company's financial obligations. Finally, by issuing corporate bonds, Dottie's Grocery shows potential investors that they have a solid financial standing and are committed to fulfilling their obligations. This can attract reputable institutional investors and individuals who trust the company's track record and believe in its future growth prospects. In the end, it's important for the family to conduct thorough research, consult with financial experts, and carefully evaluate the terms and conditions of the corporate bond issuance. Due diligence and research should ensure that Dottie’s owners have a solid plan in place to generate sufficient cash flow to cover interest payments and manage their debt

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