1. Evaluate whether the sale of stocks and bonds is the best source of easing ca
ID: 359896 • Letter: 1
Question
1. Evaluate whether the sale of stocks and bonds is the best source of easing capital.
2. How does a company decide among common stock, corporate bonds, and debt to raise needed capital?
3. Which method would be good for a internet based technology company? and Why?
MINI-CASE ON ALIBABA GROUP HOLDING 8 LTD. (BABA) IS SELLING STOCK OR BONDS BEST TO RAISE CAPITAL? Headquartered in Hangzhou, China, Alibaba is an Internet-based e-commerce retailer that is t large as eBay and Amazon combined. Handling about half of all online does in China what PayPal and Amazon do in the United States·Alibaba operates Taobao" a consumer rketplace with millions of small Chinese merchants. Recently, Alibaba acquired Silicon Valley startup company. TangoMe Inc. a mobile-messaging firm in the United States t used to make free video calls. TangoMe competes with WhatsApp, recently acquired by Facebook Alibaba is also an online bank and cloud-computing firm similar to E-Trade and Google. Alibal largest website, Taobao, has about 760 million product listings from 7 million Chinese sellers. It free for merchants to sell products through Alibaba, but they pay Alibaba an advertising fee to exposure. The no-fee strategy is very popular in China. Taobao is mostly for small merchants, whereas Tmall, another shopping site owned by Alibaba, caters to large merchants. Together, Taobao and Tmall account for more than half of all parcel deliveries in China. Alibaba is much more profitable than Amazon but has less revenues because it does not sell products that offers popular app Recently, Alibaba launched the largest Internet IPO by a Chinese firm in the history of the United States and the largest IPO ever by any firm, raising $21.8 billion in its single-day IPO. Alibahas stock price rose 38 percent in its trading debut on the New York Stock Exchange (NYSE). Alibaba broke with tradition by offering five banks equal billing to host their IPO: Credit Suisse Group AG Deutsche Bank AG, Goldman Sachs Group. P Morgan Chase, and Morgan Stanley libaba is growing both organically (internally) and externally through acquisitions, continually diversifying into related high-tech industries. With 80 percent of China's entire e-commerce markerExplanation / Answer
1 Answer -
Bonds- Bonds are a kind of borrowing and if a company issues a bond,what ever money receive against issuing bond are as form of loans and to pay over the time just like payment of credit cards and payment of personal loans.
Sales of stocks- Sales of stocks means initial public offer (IPO) by using these practices company arrange the fund for its expansion and investment in market.
Yes ,for companies sale of stocks and bonds are best source of easing capital.Companies are comfortably arrange the fund for the business expansion and investment purposes by issuing long terms bond and sale of stocks.
There are option available for capital like venture capital,long term loan etc but these option are not as good as bonds and sales of stocks.
2 Answer -
Basically its depend on type of capital need ,if company is in good position and have a regular rising market .When company like to expansion of business market then go for sales of stocks but issuing stocks means somewhere companies going to give ownership.Issuing IPO will increase the reliabilities of companies in the markets.
Corporate bonds and debt are also a channels of fund raising and it's possible when organization does not want to give ownership to other public but such practices increase the liabilities of organization.In balance sheet these items will show in liabilities side .
3 Answer -
Basically venture capital fund will be good for Internet based technology company because it just a imagination and venture capital finance basically offers for those ideas that looks really to hit the market.
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