In early 2007, Person D and Person L formed a cake Company MG. The company was a good producer of various cakes and they were specialized in few cakes. Person D did the baking activity and Person L took over the marketing and distribution. The company grew rapidly with good quality and sound marketing. After an article in the leading magazine, the sales of Company MG exploded, so Person D left his job followed by Person L. The company hired new workers for the fast growth of the company to experience cash flow and capacity issues. The company was still growing and was approached by various stores for their cakes. The couple has operated the company as a sole proprietorship. Characters of the case: Person D: The founder of Company MG Person L: The founder of Company MG Company MG: Cake producers Adequate information: Company MG faces cash flow and capacity problems. Company MG’s demand increases. Even national level markets approach them for delivery of their products. To determine: The advantages and disadvantages of changing the company to a corporation from a sole proprietorship.

Question

Want to see the full answer?

Answer 1

Question

Chapter 1, Problem 2CC

Summary Introduction

Case summary:

In early 2007, Person D and Person L formed a cake Company MG. The company was a good producer of various cakes and they were specialized in few cakes. Person D did the baking activity and Person L took over the marketing and distribution. The company grew rapidly with good quality and sound marketing.

After an article in the leading magazine, the sales of Company MG exploded, so Person D left his job followed by Person L. The company hired new workers for the fast growth of the company to experience cash flow and capacity issues. The company was still growing and was approached by various stores for their cakes. The couple has operated the company as a sole proprietorship.

Characters of the case:

Person D: The founder of Company MG

Person L: The founder of Company MG

Company MG: Cake producers

Adequate information:

Company MG faces cash flow and capacity problems.

Company MG’s demand increases. Even national level markets approach them for delivery of their products.

To determine: The advantages and disadvantages of changing the company to a corporation from a sole proprietorship.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Jeff Krause purchased 1,000 shares of a speculative stock in January for $1.89 per share. Six months later, he sold them for $9.95 per share. He uses an online broker that charges him $10.00 per trade. What was Jeff's annualized HPR on this investment? Jeff's annualized HPR on this investment is %. (Round to the nearest whole percent.)

Congratulations! Your portfolio returned 16.7% last year, 2.5% better than the market return of 14.2%. Your portfolio had a standard deviation of earnings equal to 18%, and the risk-free rate is equal to 4.4%. Calculate Sharpe's measure for your portfolio. If the market's Sharpe's measure is 0.29, did you do better or worse than the market from a risk/return perspective? The Sharpe's measure of your portfolio is (Round to two decimal places.)

On January 1, 2020, Simon Love's portfolio of 15 common stocks had a market value of $258,000. At the end of May 2020, Simon sold one of the stocks, which had a beginning-of-year value of $26,900, for $31,400. He did not reinvest those or any other funds in the portfolio during the year. He received total dividends from stocks in his portfolio of $11,900 during the year. On December 31, 2020, Simon's portfolio had a market value of $246,000. Find the HPR on Simon's portfolio during the year ended December 31, 2020. (Measure the amount of withdrawn funds at their beginning-of-year value.) Simon's portfolio HPR during the year ended December 31, 2020, is %. (Round to two decimal places.)