Communication_and_the_Audience

TO: Mark FROM: Beth DATE: October 11, 2010 SUBJECT: Review of JJJ Company Financials Dear Mark: Let me summarize the outcome of our meeting last Wednesday with members of the committee pertaining to the financial stability of JJJ Company. First of all the JJJ Company has been in business since 2000. Although they have had a rough start, their financial statements reveal a modest profit within the first three years of operation. Sales revenue was at its peak in 2002 with profits rising to record numbers. Unfortunately, JJJ Corporation caters to local clients whose demand for their services slowly has decreased throughout the past two years. With revenue now decreasing within the last six months we believe the lack of worldwide client support is the reason for the decline in sales. It is possible that if sales were extended nationally revenue may begin to rise again. In addition, we suspect the slow economy has also taken its toll on this company. Our final analysis of the stability of this corporation has pointed us to the conclusion that JJJ Corporation will have a severe loss of revenue within the next year. Therefore, we believe it is in our best interest to defer from moving forward with the acquisition of this corporation. We think that this decision is in the best interest of our company. Perhaps with the expert sales experience and the efforts of the sales staff there may be a way to devise a plan to regain sales revenue for the JJJ Company. Unfortunately, until that happens we will have to stand by our decision. Should you have any questions please don't hesitate to call the office. To: Peer in accounting department From: Berth (Staff Accountant) Subject: Advice the accounts department on the status of due diligence investigation Date: October 11, 2010 The status of the due diligence investigation is required to be told to the accounts department so that they may the correct financial picture of the organization. The organization Riordan Manufacturing is planning to acquire ABC Corporation to get more profits and more dividends to its shareholders. The organization will take the path of acquiring only if it is going provide the better returns. If there is no benefit to the organization then it shall not acquire ABC Corporation. On the basis of the due diligence investigation conducted on ABC Corporation the results do not show a very good picture. The financial position of the corporation that is to be acquired is not very sound or it does not look to be very sound (Hataway, 2006).There is definitely some problem in the organization. The financial statements of the organization show that the acquisition will not give any benefits. It will rather be a loss making decision. If Riordan Manufacturing acquires such an organization which is sick and whose financial position is not good then it will not be able to provide the increased dividend to the shareholders. The profits of the acquirer will also decrease and it will be a total loss making decision. Before acquisition of ABC Corporation, Riordan Manufacturing should do some more analysis of the company to be acquired and only after even deeper analysis; the decision for acquisition should be taken. Currently the financial position of ABC Corporation is not good enough to be acquired. So the decision of acquisition should not be taken for the time being by Riordan Manufacturing. To: Ad hoc committee From: Accounting Manager (John) Date: October 8, 2010 I know that as members of the Ad hoc committee, it is your job to have due diligence for the JJJ company. I want to provide your committee with the information that I have for you to help make a decision on the acquisition. I have reviewed all the financial statements from the JJJ Company, and I have come up with some troubling facts. The JJJ Company has not had a strong sales growth within the last few years, and it is quite evident that the JJJ Company is not financially secure. The idea that the JJJ Company wants to sell the company to Riordan Manufacturing Company goes a long way in telling a story about their past financial status. The JJJ Company has had less than stellar manufacturing and business practices over the last few years as well. There were two members of the accounting team at the JJJ Company who are currently being audited for suspected errors that were made intentionally by these two individuals. I think at this point, it can be safely stated that the financial information that has been reported by the JJJ Company cannot be fully trusted until the investigation takes place. I know the Riordan Manufacturing Company may be excited about the acquisition of the JJJ Company, but until there is more known about the accuracy of the financial reports, I am going to have to recommend that the Riordan Manufacturing Company does not move forward with the acquisition at this time. I am always available to be contacted for further questions that you may have through e-mail, or by the phone number that I sent you last week. I look forward to working with you in the future. Have a great weekend everyone. Sincerely, John Accounting Manager References Hataway, B. (2006). The Memo. Authorhouse MEMORANDUM TO: William FROM: John DATE: October 11, 2010 SUBJECT: Financial Instability of JJJ As CEO of Riordan, I’m sure you are very eager to complete the acquisition of JJJ Company. I am to inform you that going further with the acquisition is not a good idea at the present time. Upon further review of JJJ Company’s financials, it appears that this acquisition would not be profitable nor will it yield greater dividends for the stockholders. The financials have uncovered the fact that JJJ is very unstable and could result in a profit loss. Their profits have consistently been on the decrease as demand for its services have declined in the past several years. From a sales standpoint, the company will have a difficult time making profits and will be very tough to turn around profit wise. Further investigation of JJJ Company should be conducted. If we decide to move forward at this point and continue with the acquisition, it would be a good plan to get the marketing team on board to work at turning this business around and making it profitable again. The Ad Hoc Committee should come up with a timeline including when the business should be acquired and timeframe explaining how long it would take to turn business around. At your discretion, I request that the Ad Hoc Committee be granted more time in investigating this acquisition. The numbers for the present time do not add up. The losses JJJ Company are likely experience may have a strong impact on the value of our stock. The stock price will go down and we’ll see a loss of dividends. The company also has a history of not being compliant with GAAP and FASB standards which has resulted in heavy penalties. Certain changes would have to be made within the accounting department of the organization if we do decide to acquire them. These are serious matters which can alter the appearance of financial statements. Thank you for considering my advice on the matter and please don’t hesitate to contact me if you have any questions. Sincerely, John John Smith Accounting Manager Riordan Manufacturing