Case summary:
In the early of 2008, 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 the article in the leading magazine, the sales of Company MG exploded and so Person D left his job followed by Person L. The company hired new workers for the fast growth of the company for experiencing 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.
- Person L.
- Company MG.
- Magazine GD.
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 product.
To determine: The advantages and disadvantages of changing the company to a Limited Liability Company (LLC) from a sole proprietorship.
Want to see the full answer?
Check out a sample textbook solutionChapter 1 Solutions
Fundamentals of Corporate Finance
- If a sole proprietorship is the current business structure, what are the benefits and drawbacks of an LLC?arrow_forwardWhat type of companies should consider an LLC its form of ownership?arrow_forwardWhat are the advantages of operating a business as a partnership rather than as a corporation? What are the disadvantages?arrow_forward
- How does running a company as a partnership as opposed to a corporation benefit the parties involved? What are the drawbacks of this approach?arrow_forwardDiscuss how does the growth and scalability of a sole proprietorship compare to other forms of business?arrow_forwardWhich descriptor relates to the imcome approach for valuing corporations?arrow_forward
- EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENTIntermediate Financial Management (MindTap Course...FinanceISBN:9781337395083Author:Eugene F. Brigham, Phillip R. DavesPublisher:Cengage Learning