verview:The purpose of this memorandum is to propose investing in Omni company stock. The investment analysis conducted under the scenario of 10,000 shares of Omni’s stock as an available-for-sale security. The original cost of the stock was $20 per share, and the fair value at the last reporting date was $15 per share. Additionally, focus on the effect of the derivative on the bottom line of Panache’s income statement.Stock Analysis of the Omni Company.The financial statement reporting for the securities and have found a newspaper clipping dated December 31 that indicates the price of the stock of Omni company had dropped the day before because of the company’s severe financial difficulties. While the company is not expected to fail, the article states the earnings of the company have permanently declined due to changes in the new-homes market.Analyzing the scenario I noticed that the stock account is Credit with $8000 when the stock is closed at $8 per share. While with original price the stock is credit with $200,000. Also observed that with fair price of per share, the stock is credit with $150,000. Hence the unwanted loss arrived and the stock account is credit with $80000.Included that the tellurium produce 200 cars made in November so the total cost of the 200 cars are $2,400,000. The cars produced were sold in December for $15,000 each. The total amount of the sold cars are $3,000,000. We see the $60000 difference between sold and produced cars cost. And the future loss is accumulated which is $70,000.The invoice for the purchase of 2,000 pounds of tellurium on October 31 at $550 per pound. There is a note on the invoice, settled futures contract today on 10/31/2015, the purchase account has been debited with $720 and cash account is credited with $720. The contract of the future, This contract belong to the future contract so the Pre-determined rate is taken for consideration, as per every 2000 pounds , $550 for pound issued i.e (2000/550=3.6). Final RecommendationMy research and analysis make me confident to recommend investing in Omni company stock. It is evident that through this investment, the company will be profitable, and will be contributing to the efforts of making positive impact on our community and the environment.
MEMORANDUM TO: Mr. Cartwright From: Date: Address: SUBJECT: Investment in Omni company stock Overview: The purpose of this memorandum […]