Is it ethical to massage your numbers to present corporation

Assignment Help Financial Management

Reference no: EM131065677

Accounting statements can be manipulated. Please try to give an argument pro and con on this ethical issue. Any actual public examples you would like to cite would be most appreciated by all. Scenario: The financial manager is worried that the current ratio indication of short-term liquidity is so bad that it will be difficult to obtain additional funding. Therefore, the financial manager takes out a $100 million loan payable in a year and day and places the funds in cash. This improves the cash position significantly (since the cash is short-term and the loan is long-term) and creates an excellent current ratio. The day after the fiscal year ends, the financial manager repays the loan with the cash and returns to business as usual. Is it ethical to “massage” your numbers to present the corporation in the best possible light? Explain.

Reference no: EM131065677

Questions Cloud

Systematic risk associated with the returns on twitter stock : In February 2014 the risk-free rate was 4.06 percent, the market risk premium was 8 percent, and the beta for Twitter stock was 1.37. What is the expected return that was consistent with the systematic risk associated with the returns on Twitter stoc..

Cash flow is assumed to remain constant in perpetuity : Assume a privately owned firm is generating $1 million annually in cash flow and the appropriate discount rate is 12%. What is the implied capitalization multiples if cash flow is assumed to remain constant in perpetuity? Assumed to grow at a contsta..

What is the bonds default risk premium : A corporation's 10-year bonds have an equilibrium rate of return of 7 percent. For all securities, the inflation risk premium is 1.50 percent and the real interest rate is 3.0 percent. The security's liquidity risk premium is 0.15 percent and maturit..

Describe the financial structure : Describe the financial structure. Which policies are unique to the financial environment? Which financial management practices are prevalent in the financial environment? Explain why effective financial management is more difficult in health care tha..

Is it ethical to massage your numbers to present corporation : Accounting statements can be manipulated. Please try to give an argument pro and con on this ethical issue. Any actual public examples you would like to cite would be most appreciated by all. The day after the fiscal year ends, the financial manager ..

How does dell operate with such low current ratio : Discuss how Dell can operate with such a historically low current ratio, why it does so and what safeguards you would have as a financial manager to prevent this from becoming a crisis. Why does Dell operate with such a low current ratio? What safegu..

Calculate the performance measures for the portfolio : Portfolio Performance Measures Suppose that a portfolio has a beta of 1.15. Over the period of one year, the portfolio had a return of 12.4% with a standard deviation of 16.2%. If the T-bill return for the year was 1.2% and the return on the S&P500 w..

What is the value of the monthly withdraws : Joe aged 32 saves 4% of his salary at the end of each year for the next 20 years as a part of his retirement plan. Once the deposits are made, Joe let it accumalate interest till he retires. What is the value of the monthly withdraws

Assume that a portfolio of stocks had an average return : Assume that a portfolio of stocks had an average return of 12% and a standard deviation of 19% over a certain holding period. In which range do the returns fall 99% of the time, assuming the returns are distributed normally?

User Account

All Pages