Question: Chapter 13 - Ethics in Action DB #1 Head Donuts Inc. is a retailer of designer headphones, earphones, and hands-free audio devices. Polly Ester, the
Chapter 13 - Ethics in Action DB #1 Head Donuts Inc. is a retailer of designer headphones, earphones, and hands-free audio devices. Polly Ester, the company president, is reviewing the company's financial statements after the close of the fiscal year and is troubled that earnings decreased by 10%. She shares her concerns with the company's chief accountant, Lucas Simmons, who points out that the drop in earnings was balanced by a 20% increase in cash flows, from operating activities. Polly is encouraged by the increase in cash flows from operating activities but is worried that investors might miss this information because it is 'buried' in the statement of cash flows. To make it easier for investors to find this information, she instructs Lucas to include an operating cash flow per share number on the face of the income statement, directly below earnings per share. While Lucas is concerned about using such an unconventional financial reporting tactic, he agrees to include the information on the income statement Is there any ethical issue with Lucas' behavior. You will need to use the internet to research an answer, include one outside reference in your response (citing per APA style), and have a minimum of 100 words in your response. For this DB, please respond to the thipad below from your instructor. Do not start a new DB thread; posts not posted as a reply to the instructor will not be graded
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
