Reference no: EM133150157

Question - M. K. Gallant is president of Kranbrack Corporation, a company show stock is traded on a national exchange. In a meeting with investment analysts at the beginning of the year, Gallant had predicted that the company's earnings would grow by 20% this year. Unfortunately, sales have been less than expected for the year, and Galant concluded within two weeks of the end of the fiscal year that it would be impossible to report an increase in earnings as large as predicted unless some drastic actions was taken. Accordingly, Galant has ordered that wherever possible, expenditures should be postponed to the new year - including canceling or postponing orders with suppliers, delaying planned maintenance and training, and cutting back on end of year advertising and travel. Additionally, Gallant ordered the company's controller to carefully scrutinize all costs that are currently classified as period costs and reclassify as many as possible as product cots. The company is expected to have substantial inventories at the end of the year. Do you believe Gallant's actions are ethical? Why or why not?