b The directors of Mino were debating on whether to use debt or
equity in future financing strategies of the business. The
family members, however, do not wish to bring in additional
equity finance in the firm. This implies that the equity capital
will either be raised from issuing shares to outsiders or
retained earnings cutting down dividend
MBS the Marketing Director, feels that debt financing
will be quick and easier to raise due to the availability of
company assets to use as collateral. He believes that
despite the expected increase in financial risk, debt
option will quicken the implementation of future capital
projects and therefore, no reason to worry.
Nathanael, the Human Resources Director feels that debt
finance will expose the business to greater risks. The
director thinks that equity would be the best option in
that they can issue as many shares as possible since they
are issuing to outsiders. The HR directors think that
raising equity finance through issuance of shares has no
limitations
As a consultant to the family, write a report in which
you discuss the current position of the family in the
company and the likely impact of their refusal to
participate in further equity financing. To be included
in the report is your reaction to the views of the two
directors Marketing and Human Resources who are
both family members.
