Day: October 5, 2020

Susie Harrison is a financial consultant to Investments Trust Inc., a real estate syndicate.  Investments Trust Inc. finances and develops commercial real estate (office buildings.)  The completed projects are then sold as limited partnership interests to individual investors.  The syndicate makes a profit on the sale of these partnership interests.  Susie provides financial information for the offering prospectus, which is a document that provides the financial and legal details of the limited partnership offerings.  In one of the projects, the bank has financed the construction of a commercial office building at a rate of 10% for the first four years, after which the rate jumps to 15% for the remaining 20 years of the mortgage.  The interest costs are one of the major ongoing costs of the real estate project.  Susie has reported prominently in the prospectus that the break-even occupancy for the first four years is 65%.  This is the amount of office space that must be leased to cover the interest and general upkeep costs over the first four years.  The 65% break-even is very low and thus communicates a low risk to potential investors.  Susie uses the 65% break-even rate as a major marketing tool in selling the limited partnership interests.  Buried in the fine print of the prospectus is additional information that would allow an astute investor to determine that the break-even occupancy will jump to 95% after the fourth year because of the contracted increase in the mortgage interest rate.  Susie believes prospective investors are adequately informed as to the risk of the investment.

Required:  Comment in detail on the ethical considerations of this situation.

Case 12: Amazon.com Inc.: Retailing Giant to High-Tech Player? (Internet Companies)
Conduct a strategic analysis using the Executive Summary template.  Prepare and submit a three-page executive summary that discusses what strategic alternatives are available and provide a recommended strategy.

You are to work alone to analyze and prepare the Executive Summary for the case.  NOTE: Click “Submit Assignment” in the upper right hand corner of your screen to turn in your Executive Summary no later than Sunday, midnight CT.. Name your file with your name and the unit number, i.e. Jones1 or Brown1. Your file should be in either Microsoft word (.doc or .docx) or rich text (.rtf) format.
Synopsis of the Case: The content of the synopsis should present relevant background facts about the case under examination.

Relevant Factual Information about the Problem or Decision the Organization Faced: State the precise problem or decision the organization faced.  The section should include information that addressed the business issue under examination. This section should be no longer than a single paragraph.

Explanation of Relevant Concepts, Theories and Applications Derived from Course Materials:  This section should be the bulk of your paper. Analysis of the business problem or decision in light of the course concepts must be presented, as well as the business lesson another organization could learn from this situation. Besides citation to the text, learners must conduct research in the University library related to the top. Citing the textbook only is not enough to demonstrate you understand and can apply the course objectives. Here is where comparative and contrasting positions should be considered and examples and illustrations provided.

Recommendations: Provide logical recommendations to address the business lesson identified above. The recommendations need not to be specific to the organization examined, but should consider how other organizations, if similarly situated, could lessen the impact of the problem or decision identified. Recall, that the organization under examination has already moved pasted this problem so any recommendations made, at this point, are fruitless. The focus of this section should be on what other companies should be aware of to address similar problems or decisions. Citation to the textbook alone is insufficient for analysis in this section. Learners should conduct research in the Universitys library to support their positions. Depth of scholarship is not demonstrated by providing personal opinions alone, but by using examples, analogies, comparison and illustrations from the academic literature. Not only does this synthesize the material to assist the readers understanding, it is an effective way to present the academic sources and extend the discussion of your ideas. This section should be a paragraph or two.

Alternative Recommendations: This section is not a continuation of the prior. Provide suggestions for how to avoid the problem or decision the examined organization faced. Analysis here should be may be forward- thinking, predictive or, most likely, preventative in nature but tied to the thesis statement. Again, opinion is insufficient to provide the required academic analysis. Sources, other than the text, must be provided to sustain the statements made. This section should be a paragraph, at most.

Conclusion: End the assignment with a summary of the important points made in the document. No new information may be presented. Writing a conclusion can be done by rewording the opening or reformulation the topic sentences of each paragraph to make a summary for the reader. This section should be a paragraph, at most.

The following statement was made by the vice president of finance of the Electric Company: The managers of a company should use the same information as the shareholders of the firm.  When managers use the same information in guiding their internal operations as shareholders use in evaluating their investments, the managers will be aligned with the shareholders profit objectives.

Required:  Respond to the vice presidents statement.  Be sure to discuss the major differences between managerial accounting and financial accounting, including the purpose, use, and level of detail of information.