Financing Plan to Raise Capital Research Paper Example | Topics and Well Written Essays - 2250 words

Financing Plan to Raise pileus - Research Paper ExampleThe Marina Restaurant was blessed with an interest from very influential people and customers thus far from the beginning. It usually hosts live bands apart from victuals and this has helped it solidify its image as the premier casual shake and roll diner. With all the success, the company has grown globally. The vast amounts of locations reflect the effective and efficient management which has lead a small investment in a single cafe into an internationally recognized handicraft expanding in just over 18 years. Marina Restaurant revenues are mainly from cafes, selling memorabilia and hotels. To ensure customers hap coming back they ensure they provide excellent value in the form of good food and entertainment. With such growth, the management has decided to open more outlets for the restaurant. However, it needs capital to start up the investment. Start-up documentation The Marina Restaurant seeks funding of $900,000 for the new venture and it will jerk off it from three investment groups or chthonian(a) equity offering which entails raising capital through the issue of stock. This approach is preferred at this decimal point since there are no repayment schedule or debt service repayments. The shareholders will only get their returns when the company makes profits. The shareholders also have a right to vote during annual general meetings and can select the board of directors (Owen 2003). The ordinary shareholders are the owners of the business and can receive dividends from profits. However, it is a costly process as there are floatation costs incurred and it can lead to dilution of shares held by existing shareholders. It is also unsafe if there are no dividends payable at year end thus shareholders end up bearing the operational risk. The investment documents will be prepared by legal firms representing each party and will not be limited to Form D Security Exchange Commission (SEC) filing, Subscriptions harmony and the Private Placement Memorandum (PPM). The subscriptions agreement reflects the terms and conditions of the investment. In other words, it is the sales contract for purchasing securities. Form D SEC filing notifies the commission that the company is using Regulation D class and also gives the basic information of the company. It is vital to note that this form is not an approval document unless a mere notification that the company has an offering in the place. It is a violation of the security laws under the federal government to raise capital without this document. The PPM discloses all the companys information to investors. The information by chance whether the company is raising debt or equity, the risk the investors may face and the terms of the investment( share price, maturity dates or note amounts). Financial projections Financial projections will be on the income statement, statement of financial position, statement of cash in flows as well as on the financial ratios. Projections will be on years ranging from 1 to 5, and they are based on historical information already available from the company (Owen 2003). Apart from the forecast, the break-even synopsis will be carried out. Break even analysis Break even analysis shows the relationship amid selling prices, sales volume, variable costs, fixed costs and profits at various levels of activity. It is also referred to as cost-volume profit analysis. It used in determining the break-even point where the total revenue equals the total costs. This means that at BEP, the profits are zero. Fixed costs include rent,