Why buy new, when used will do?

Abstract

Learning outcomes

Students are exposed to debt and equity financing; analysis of company affairs using selected financial statement information; use of ratios in financial analysis; the impact of adequate financing on company performance; and trade-offs companies must make in their day-to-day operations.

Case overview/synopsis

Jetcon Corporation’s business model involved the importation of pre-owned cars from Japan for re-sale in Jamaica. It was a fiercely competitive business as there were over 100 companies involved in this sector. There was also a vibrant new-car sector. Jetcon focused on importing mid to low price Japanese pre-owned models, which were already common on Jamaican roads, and which would be affordable to the larger segment of buyers. Like most small businesses, it experienced difficulty raising financing in the amounts and cost that is required and this contributed to its decision to raise equity capital through an initial public offer. It was the first used-car dealer to list on the Jamaica Stock Exchange.

Complexity academic level

This case is suitable for final-year undergraduate students in finance. By that time they should already have been exposed to debt, equity and stock markets. It helps students to explore some of the issues involved in financing a company’s operations.

Supplementary materials

Teaching Notes are available for educators only. Please contact your library to gain login details or email support@emeraldinsight.com to request teaching notes.

Subject code

CSS 3: Entrepreneurship.

Citation

Nicholson, M.R. (2019), "Why buy new, when used will do?", , Vol. 9 No. 3. https://doi.org/10.1108/EEMCS-01-2019-0014