Question: You are the accountant for a medium size manufacturer Your company

You are the accountant for a medium-size manufacturer. Your company has some existing debt that requires the company to maintain a current ratio of 1.50 or higher. If the ratio drops below that value, the lender can increase the interest rate from 6% to 9%. Recently, the company's current ratio has been hovering around 1.50, and the president believes that when some long-term debt maturing in the following year is reported as current, the ratio will fall below 1.50. The president asks you to keep the long-term debt as a long-term liability instead of reclassifying it as a current liability. "After all, "he says, "it is still reported as a liability."
Is there an ethical issue with the president's request? How should you respond?

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  • CreatedJuly 16, 2015
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