The issuing of new stocks could be a temporary solution to retrieving more financial resources. However, the chances of success for such a strategy are rather limited due to the difficulties the company is in and the already decreased quotation. It is true that the stock price increased by 1.8%, but this is not sufficient to boost investors' trust and interest. Furthermore, given the already existent financial difficulties, it would probably be best if Wendy's International looked for funds somewhere else.
The most viable alternative would be to request loans from financial institutions. The reason why this alternative would be preferable to issuing stocks is given by a tax factor. As such, interest expenses are deductible, whereas dividend payments are not (ch. 16, p.32). But given the state the company is in, they might find it difficult to obtain finances from banks. And if they did, the interest rate costs would be extremely high. Furthermore, the bank loan would have to be returned. And this means that Wendy's must invest the retrieved finances into growth and development strategies, which ensure the corporation with future income. But they must also pay the debt to their shareholders. And halving the loan into investments and debt payments can easily lead to insufficient resources to achieve either one of the two desiderates. For the future, this would mean that the company will once again face financial shortages and could easily find itself in the incapability to pay the loan and face as such bankruptcy.
Another potential solution would be lease. This means that Wendy's would close leasing contracts with manufacturing suppliers in order to purchase newer and better technologies at flexible payment rates. These technologies could then be used to improve the quality of Wendy's products and increase the efficiency of their business operations. The lease contract would allow the company to use the purchased items and they would have to pay the supplier a monthly rate. The ownership over the items would only be achieved at the maturity date of the lease contract. However this does indeed sound like a viable solution, leasing involves additional costs and can even prove more expensive than bank loans.
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