Corporate Financial Accounting 14th Edition by Carl Warren,James Reeve,Jonathan Duchac

تمرين 31

Communication
The president of Freeman Industries Inc. made the following statement in the annual report to shareholders: "The founding family and majority shareholders of the company do not believe in using debt to finance future growth. The founding family learned from hard experience during Prohibition and the Great Depression that debt can cause loss of flexibility and eventual loss of corporate control. The company will not place itself at such risk again. As such, all future growth will be financed either by stock sales to the public or by internally generated resources."
Write a brief memo to the company's president, Boss Freeman, outlining the errors in his logic.