Case App1

Topics: Finance, Public company, Privately held company Pages: 3 (734 words) Published: November 12, 2011
Answers for Case Application 1

1. How does Amy’s Ice Cream differ from a publicly held in corporation?

The reason why Amy’s Ice Cream differs from a held in corporation is a privately held corporation formed in 1984 with 22 family members and friends as shareholders. _Company members which does not offer or trade its company stock (shares) to the general public on the stock market exchanges, but rather the company's stock is offered, owned and traded or exchanged privately. _The corporation generally has fewer or less comprehensive reporting requirements for transparency, via annual reports, etc. than do publicly traded companies. _ By not being required to disclose details about their operations and financial outlook, Amy’s Ice Cream is not forced to disclose information that may potentially be valuable to competitors and can avoid the immediate erosion of customer and stakeholder confidence in the event of financial duress.

2. What are some of the particular advantages of corporate ownership for firm such as Amy’s Ice Cream?

With corporate ownership, liability is limited to the investors’ personal investment. If the business should fail, investors stand to lose only the money they have invested. _In addition, corporations have a legal life separate from their founders and owners. Therefore, corporations can, at least theoretically, go on indefinitely. _Shares can be sold and passed on from generation to generation. Corporation also has advantages in raising capital. For example, Amy’s Ice Cream should sell more stock to expand the amount of available funds. The funds could be used to buy more equipment or open more stores. Lenders are also more willing to grant loan to corporation because of their legal status and continuity.

3.How well do you think Amy’s is working to ensure its continued survival and success? Looking ahead to future growth, what marketing, financial, or other suggestion would...
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