45. (Ethics) Company\'s most recent financial statements showed dismal performan

Question

45. (Ethics) Company's most recent financial statements showed dismal performance There was a net loss of $10.000 and the statement of cash flows showed a net cash decrease in all categories. The company president called all the managers together and asked them to do all they could to make sure the next quarter's performance was better. Ted Flay, manager of the manufacturing division, sold off old manufacturing equipment. He also reclassified several workers to part time (30 hours per week) and hired additional temporary workers to take up the slack. This saved the company money, since part-time workers do not have the same insurance and other benefits as full-time workers Will Smith, financial manager, immediately suspended those on which interest would accrue. He also instituted aggressive collection procedures payments on all accounts except Required: 1. Were Ted Flay's actions ethical? Explain. 2. Were Will Smith's actions ethical? Explain. 3. Were the company president's actions ethical? Explain. Dao/LL asodoou

Explanation / Answer

1.

Ted Flay’s actions are not ethical because Ted Flay is working as a manufacturing manager so before selling old capital assets there should be perfect co-ordination between finance department. Apart from this manufacturing manager should not sell old equipments for maximizing profitability of the department because after selling capital nature assets we can not show more revenues. Hence actions of Ted Flay are not looking ethical.

It is also given in the question that manufacturing manager reclassifying permanent workers to part time workers so it will affect several workers hence Ted Flay’s actions are not ethical.

2.

Will Smith’s actions are also unethical because finanace manager should not to suspend payments on accounts because such actions will affect future image of the firm hence it can be said that for improving short-term profitability or cash position, a finance manager should not adopt such business practices.

3.

Actions of the president can be said ethical because president told managers for taking actions, which can improve the performance of the firm hence on the basis of statement of president we can not say that his actions are unethical. As we know that president have rights & authority to order his subordinates in such manner for improving the performance of the firm but if president told for some wrongs activities then we can say that his actions wer unethical but it is not given in the question hence president’s actions are ethical.

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