Identify the Main Advantages and Disadvantages of Going Public

question 10

Essay

Identify the main advantages and disadvantages of going public.
A.Advantages - ability to obtain equity capital,enhanced ability to borrow,enhanced ability to raise equity,liquidity and valuation,prestige,personal wealth.
B.Disadvantages - Increased risk of liability,expense,regulation of corporate governance policies and procedures,disclosure of information,pressures to maintain growth pattern,loss of control.

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Definitions:

Unrealized Gain

The unrealized gain from an investment that hasn't been converted into cash.

Significant Influence

The power to participate in the financial and operating policy decisions of an investee, without controlling those policies.

Cash Dividends

Payments made by a corporation to its shareholders out of the company's current or retained earnings, usually in the form of cash.

Net Income

The total profit of a company after all expenses, taxes, and deductions have been subtracted from total revenue.