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Accounting, Finance, SPSS
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English (U.S.)
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Topic:

Real World Decision Making

Article Instructions:

Discussion Post #7: Real World Decision Making
René Kelly, president of RL Industries, wishes to issue a press release to bolster her company’s image and maybe even its stock price, which has been gradually falling. As controller, you have been asked to provide a list of 20 financial ratios and other operating statistics for RL Industries’ first-quarter financials and operations.
Two days after you provide the data requested, Erin Lourdes, the public relations director of RL, asks you to prove the accuracy of the financial and operating data contained in the press release written by the president and edited by Erin. In the news release, the president highlights the sales increase of 25% over last year’s first quarter and the positive change in the current ratio from 1.5:1 last year to 3:1 this year. She also emphasizes that production was up 50% over the prior year’s first quarter.
You note that the release contains only positive or improved ratios and none of the negative or deteriorated ratios. For instance, no mention is made that the debt to assets ratio has increased from 35% to 55%, that inventories are up 89%, and that although the current ratio improved, the accounts receivable turnover fell from 12 to 9. Nor is there any mention that the reported profit for the quarter would have been a loss had not the estimated lives of RL plant and machinery been increased by 30%. Erin emphasized, “The Pres wants this release by early this afternoon.”
Instructions
Who are the stakeholders in this situation?
Is there anything unethical in the president’s actions?
Should you as controller remain silent? Does Erin have any responsibility?
Must be 100 words minimum.

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 Real World Decision Making
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Typically, stakeholders are usually any individuals who have an interest in the company in one way or another. Stakeholders do not usually take an active part in the direct management of the company, and instead often run it from the background. Such is the case in this situation too, as stakeholders are in the background; the group of people waiting to read from the financial information being prepared by the president.
There are a number of unethical aspects that the president seems to have opted for. First, she seems to be abetting the concealment of information when she pushes the controller to only release positive information about the company at the expense of any negative one. This is clearly in contravention of the role of a controller in any company, which is us...
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