Week 6

Respond 1:

I chose Deloitte’s company. Deloitte is one of the “Big Four” accounting organizations and the largest professional services network in the world by revenue and number of professionals with headquarters in London, United Kingdom. Deloitte provides audit, tax, consulting, enterprise risk and financial advisory services with approximately 312,000 professionals globally. These financial statements illustrate the presentation and disclosure requirements of IFRSs for the year ended 31 December 2019 by an entity that is not a first-time adopter of IFRSs. They illustrate the impact of the application of IFRSs that are mandatorily effective for the annual period beginning on 1 January 2019.

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In finance, a bond is an instrument of indebtedness of the bond issuer to the holders. The most common types of bonds include municipal bonds and corporate bonds. The bond is a debt security, under which the issuer owes the holders a debt and (depending on the terms of the bond) is obliged to pay them interest (the coupon) or to repay the principal at a later date, termed the maturity date. Strong Deloitte cross-department teams enable one-stop approach to cover most client needs and provide innovative solutions with regards to green bonds issuance. Green Bonds function the same way as any other bonds, in that they are a fixed income issuance. However, their proceeds are allocated solely to financing new or existing projects with climate and environment-related objectives. Set standards for Green Bonds issuance make them a tool that directly promotes the development solutions, as issuers are obligated to use the proceeds from the bond issuance for project deemed environmentally beneficial. As with normal bonds, while the proceeds fund specific projects, the Green Bond’s return is usually backed by the credit risk of the issuer as a whole.

Respond 2:

Financial statements record the financial activities of a company by presenting the financial information as clearly and concisely as possible. In coming up with my response to this week’s discussion question, I have the option of choosing from a variety of companies such as Fortune 500 companies. I could have also opted for a company such as Gucci, which deals with clothing and fashion or Whole Foods Company, which sells with organic food products. In answering this week’s discussion question, one must also need to understand that a bond is a fixed income investment where an investor loans money to an entity, which borrows funds for a defined period at a variable or fixed interest rate.

Keep in mind, organizations such as Whole Foods uses bonds to raise money and finance a variety of projects and activities. In the case of Whole Foods, the company mainly issues coupon bonds, which refers to the rate the organization projects rather than its physical nature in the form of certificates or coupons. Bonds with higher interest rates are more appealing to investors, since they produce greater yields and the bonds are formed electronically, when taking into consideration possible future changes in the organization, resulting from innovation and technology. 

For the fiscal year ending September 24, 2017, Whole Foods Form 10-K reports they currently have $1.0 billion aggregate principal amount of senior notes (bonds) that mature on December 3, 2025. The bonds were issued on December 3, 2015 to back a share-repurchase program and have a fixed interest rate of 5.2% per year and are payable semiannually.  The interest rates payable is subject to adjustment due to certain credit rating events.  Annual interest payments would not be materially affected due to a credit rating downgrade from Moody’s or S&P (U.S. Securities and Exchange Commission, 2017).

On August 28, 2017 Amazon acquired Whole Foods Market for approximately $13.2 billion (Cheng, 2017).  As of December 31, 2017, Amazon had $17.0 billion of unsecured senior notes issued and assumed with the acquisition of Whole Foods Market, with $99 million net unamortized discount on the notes.  In December 2017, Amazon exchanged $872 million of Whole Foods Market 2025 notes with an effective interest rate of 3.02%.  $128 million of 2025 notes issued by Whole Foods Market did not participate in Amazon’s December 2017 exchange offer (U.S. Securities and Exchange Commision, 2017).

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