Question

Class 5-Case 1 Case Details: The president of a company whose stock is traded on a national exchange held a meeting with investment analysts at the beginning of the year. The president had predicted that the company's earnings would grow by 20% this year. Unfortunately, sales have been less than expected for the year, and the Company concluded within two weeks of the end of the fiscal year that it would be impossible to ultimately report an increase in earnings as large as predicted unless some drastic action was taken. The president 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, the president 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 costs. The company is expected to have substantial inventories at the end of the year. Required: • Analyze the impact of the president's actions on the company's results? • What concerns are raised by the president's actions? Discuss the ethical issues arising out of the president's decisions.

Answer 1

ANSWER~

IN THE GIVEN SITUATION ARE AS FOLLOW THAT

Case Details: The president of a company whose stock is traded on a national exchange held a meeting with investment analysts at the beginning of the year. The president had predicted that the company's earnings would grow by 20% this year. Unfortunately, sales have been less than expected for the year, and the company looked within two weeks of the end of the fiscal vear that it would be impossible to ultimately report an increase in earnings as large as predicted until some drastic action was taken. The president 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. the president 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 costs. The company is expected to have substantial inventories at the end of the year.

Above situation

Stakeholders were definitely affected by the 20% increase this year in the decision taken by the company, but due to some circumstances the company could not live up to its decision and hence the profit of the company decreased. For this, the president now cuts all expenses and unnecessary labor, monitoring the checks and rigorously to avoid damage to John and the company so that the expenses of the company are reduced and profit is increased again.

. This ethical decision taken by the President generates an ethical dilemma, for this, they have to take care of the company and the stakeholder as well,

.to take some decision that will benefit the company and the shareholder can also benefit from the closure or loss of the company. To be saved.