Strategic Recommendations on How to Raise Additional Capital:

The capital structure of a company is a crucial element of its financial management. It refers to the mix of
debt and equity financing used to fund a company's operations and growth. A well-optimized capital
structure is essential for a company's long-term sustainability, as it determines the company's ability to
meet its financial obligations, support its growth plans, and maximize shareholder value.
In the case of Grace® , the current capital structure issue is a significant concern that requires urgent
attention. The company's financial statements reveal that its current assets are not generating enough
returns to cover its operating expenses and debt obligations, leading to low liquidity and solvency ratios.
This indicates that the company may face difficulties in meeting its short-term and long-term financial
obligations, which could adversely impact its operations and growth prospects. Therefore, addressing the
capital structure issue is imperative for the company's financial stability and growth prospects. To address
this situation, the company needs to consider raising additional capital to support its growth ambitions
and improve its financial position. The sources of capital available to the company include debt financing
and equity financing. Debt financing involves borrowing funds from lenders such as banks and other
financial institutions, while equity financing involves raising funds from investors by issuing new shares
of stock. The decision between debt and equity financing for a business depends on various factors such
as the current economic climate, capital structure, and business lifecycle stage (CFI, 2023).

Advantages of Equity Financing as a Potential Solution:

Equity financing offers a compelling solution for Grace® 's capital structure issue. By issuing new shares
of stock to investors, the company can raise the necessary capital without incurring the burden of debt
repayments. This reduces financial strain, especially during uncertain economic times, and provides
access to valuable expertise and resources from investors. These investors can bring industry knowledge,
networks, and experience to support the company's operations and growth strategies, providing strategic
guidance and support. Furthermore, equity financing allows for the sharing of risks and rewards, aligning
the interests of the company and its stakeholders. By carefully implementing an equity financing strategy,
Grace® can improve its financial position and support its growth ambitions in the highly competitive
fashion industry.

Options for Raising Additional Equity Capital:

Grace® can consider various options for raising additional equity capital to address its capital structure
issue. Some of the potential options include:
1. Initial Public Offering (IPO): An IPO involves offering shares of stock to the public for the first time,
thereby allowing the company to raise funds from a wide range of investors. Grace® can consider
going public by issuing shares of stock to the public through an initial public offering (IPO). This
can be a significant source of capital, as it allows the company to raise funds from a large number
of investors. However, going public involves extensive regulatory compliance, increased scrutiny,
and additional costs associated with listing and maintaining a public company (Brau, Ryan and
DeGraw, 2006 pg 15). Grace® would need to carefully evaluate the benefits and drawbacks of an
IPO and assess its readiness to meet the requirements of being a publicly traded company and
potential dilution of ownership.
2. Private Placement: Another option for raising additional capital is through a private placement. This
involves offering shares of stock to a select group of investors, such as institutional investors,
venture capitalists, or private equity firms. A private placement can be a more flexible option
compared to an IPO, as it allows the company to negotiate terms and conditions with the investors.
However, it may also require the company to give up a significant portion of ownership and control
to the investors. Grace® can explore private placement as a means of raising capital while
maintaining some level of control over the company's operations.
3. Crowdfunding: Crowdfunding is a relatively new and innovative way of raising capital, particularly for
small and medium-sized enterprises (SMEs). Grace® can consider leveraging crowdfunding
 platforms to raise funds from a large group of individuals who are interested in supporting the
company's growth ambitions. Crowdfunding can offer several benefits, such as access to a wide
pool of potential investors, increased visibility, and customer engagement (Estrin, Gozman and
Khavul, 2018 pg 6.
4. Strategic Partnerships: Strategic Partnerships and Joint Ventures: Grace® can explore strategic
partnerships and joint ventures with other companies in the fashion industry to raise additional
capital. This can involve collaborations with suppliers, distributors, or retailers to share resources,
expertise, and risks. Strategic partnerships and joint ventures can provide access to new markets,
technologies, and customer bases (Hennart, 2012 pg 16), and can also help in spreading the costs
and risks associated with business expansion. However, it requires careful negotiation, due
diligence, and legal agreements to ensure mutual benefits and alignment of goals.

In conclusion, this report comprehensively analyses Grace® 's financial and operational performance,
highlighting key issues and challenges facing the company's growth. The report suggests various
strategies and recommendations to enhance the company's overall performance, such as hiring additional
managers to manage daily operations, diversifying suppliers, and exploring fresh capital injection options.
Additionally, the report recommends strategies for improving profitability, analyzing qualitative
performance, and managing working capital. It is hoped that this report will provide valuable insights to
the company's management team to make informed decisions about its future direction, thereby ensuring
the company's long-term sustainability and success in the highly competitive fashion industry.

Reference
Brau, J.C., Ryan, P.A. and DeGraw, I. (2006). Initial Public Offerings: CFO Perceptions. The
Financial Review, 41(4), pp.483–511. doi:https://doi.org/10.1111/j.1540-6288.2006.00154.x.

Estrin, S., Gozman, D. and Khavul, S. (2018). The evolution and adoption of equity
crowdfunding: entrepreneur and investor entry into a new market. Small Business Economics,
51(2), pp.425–439. doi:https://doi.org/10.1007/s11187-018-0009-5.

Hennart, J.-F. (2012). Emerging market multinationals and the theory of the multinational
enterprise. Global Strategy Journal, 2(3), pp.168–187. doi:https://doi.org/10.1111/j.2042-
5805.2012.01038.x.