Kim, one of your friends, knows that you are studying accounting, and occasionally contacts you for advice. You find this email waiting for you.

REQUIRED:

Based on your understanding of the nature and purpose of financial statements, provide the text of the email you would send to reply to Kim:

1. explaining why you do, or do not, agree with Kim;
2. outlining the basic approach to financial statement analysis;
3. clarifying whether, and why or why not, you believe that the reported Net Loss is the most important figure for Kim to focus on.

TOTAL: 20 MARKS

FW: INVESTMENT OPPORTUNITY - I NEED YOUR URGENT ADVICE This message was sent with High importance At the U2 concert this afternoon, a mate of mine who does a fair bit of share trading put me onto this investment. She told me it's the next "big thing", and could grow as fast as Facebook. She also told me that I need to decide whether to invest in this company by tomorrow at 12.00 noon, and the opportunity won't ever come up again. Here's the info she gave me: FINANCIAL RESULTS NZ Dollars FY19 FY18 FY19:FY18 Sales 1,862,949 804,062 132% Other Revenue 1,241,202 1,374,581 -10% Total Revenue 3,104,151 2,178,643 42% Net Loss (3,380,454) (4,168,792) 19% Net cash outflow from operating activities (2,678,321) (3,729,191) 28% Cash and Cash Equivalents 1,737,775 1,212,454 43% That sales increase is phenomenal, and they're got heaps of cash, so I reckon it's pretty safe Based on these numbers, I'm thinking of investing $10,000 into it, which should get me about 5,000 shares at $2.00 per share. What do you think? Kim