Write a letter (one page) to your friend explaining your opinion on the bond purchase and why it may be unwise to base an investment decision on the financial statements that has been provided to you.

In 2022, your friend Karla Angela, who knows that you always have your eye out for a profitable investment, has discussed the possibility of purchasing some corporate bonds. They suggest that you may wish to get in on the “ground floor” of this deal. The bonds being issued by A to Z Corp. are 20-year debentures which promise a 75% rate of return. A to Z Corp manufactures novelty/costume clothing and their busiest season is the holidays.

You have told your friend that, unless you can take a look at A to Z’s financial statements, you would not feel comfortable about such an investment. Believing that this is the chance of a lifetime, they have procured a copy of A to Z’s most recent, unaudited financial statements which are from 2019. These statements were prepared by the spouse of the owner. You peruse these statements, and they are quite impressive. The balance sheet showed a debt-to-equity ratio of 0.10 and, for the year shown, the company reported net income of $3,120,000.

The financial statements are not shown in comparison with amounts from other years, so you only have 2019. In addition, there were no notes about inventory valuation, depreciation methods, loan agreements, etc.

Write a letter (one page) to your friend explaining your opinion on the bond purchase and why it may be unwise to base an investment decision on the financial statements that has been provided to you. Be sure to explain why these financial statements are neither relevant nor representationally faithful.

Make sure to include the terms you have learned in class and back up your answers with examples or detail – don’t just list the terms. Complete your letter in the proper format (one of the ones listed) and submit it by the deadline. (https://owl.purdue.edu/owl/subject_specific_writing/professional_technical_writing/basic_business_letters/sample_letters.html)

For Karla and your address use 6200 Frank Ave NW, North Canton, OH 44720.

By submitting this paper, you agree: (1) that you are submitting your paper to be used and stored as part of the SafeAssign™ services in accordance with the Blackboard Privacy Policy; (2) that your institution may use your paper in accordance with your institution’s policies; and (3) that your use of SafeAssign will be without recourse against Blackboard Inc. and its affiliates.

Last Completed Projects