schedules her appointments from 9 a.m. to 5 p.m. and takes long lunch hours. Alexandra regularly makes significantly larger withdrawals of cash than Kellie does, but, she says, “Kellie, you needn’t worry, I never make a withdrawal without you knowing about it, so it is properly recorded in my drawings account and charged against my capital at the end of the year.” Alexandra’s withdrawals to date are double Kellie’s.
Alexandra and Kellie operate a beauty salon as partners who share
- Who are the stakeholders in this situation?
- Identify the problems with Alexandra’s actions and discuss the ethical considerations involved.
- How might the
partnership agreement be revised to accommodate the differences in Alexandra’s and Kellie’s work and withdrawal habits?
1
In general, a stakeholder is someone who has an interest or concern in a company or anything comparable. So, in this case,
Alexandra and Kellie are the stakeholders.
2
The main issues in this situation with Alexandra are less work hours than Kellie and excessive cash withdrawals, which may lead to a lack in working capital requirements.
To be more specific, Alexandra's working hours are from 9 a.m. to 5 p.m., whereas Kellie's working hours are from 8 a.m. to 6 p.m. Despite working hours, revenues and losses are still shared equally. So there is an issue with Alexandra's activity (in an ethical approach in the workplace) in this particular situation since she is getting that share of profit although working less than Kellie.
And, while Alexandra is withdrawing more than Kellie, the difference will not affect the profits and losses that will be shared because it was stated in the question that every withdrawal made by alexandra is rooted through her capital account. However, excessive cash withdrawals than required may result in a shortage in the working capital requirement that is required for day to day business activities, so the practise will not be encouraged in the long run.
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