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"We must get it," Erickson Santos, president of Industrial Fasteners, roared. "Withou e in big trouble." The "it" Mr. Santos referred to is the renewal of a P20 million loan v ila First Bank. The big trouble he fears is the lack of funds necessary to repay the exist E and few, if any, prospects for raising the funds elsewhere. Mr. Santos had just hung up the phone after a conversation with a bank vice-presiden h it was made clear that this year's statement of cash flows must look better than last yea Santos knows that improvements are not on course to happen. In fact, cash flow projectic e dismal. Later that day, Timothy Dela Cruz, assistant controller, was summoned to Mr. Santo e. “Dela Cruz," Santos barked, "I've looked at our accounts receivable. I think we c

"We must get it," Erickson Santos, president of Industrial Fasteners, roared. "Withou e in big trouble." The "it" Mr. Santos referred to is the renewal of a P20 million loan v ila First Bank. The big trouble he fears is the lack of funds necessary to repay the exist E and few, if any, prospects for raising the funds elsewhere. Mr. Santos had just hung up the phone after a conversation with a bank vice-presiden h it was made clear that this year's statement of cash flows must look better than last yea Santos knows that improvements are not on course to happen. In fact, cash flow projectic e dismal. Later that day, Timothy Dela Cruz, assistant controller, was summoned to Mr. Santo e. “Dela Cruz," Santos barked, "I've looked at our accounts receivable. I think we c

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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ETHICAL DILEMMA "We must get it," Erickson Santos, president of Industrial Fasteners, roared. "Without it, we're in big trouble." The "it" Mr. Santos referred to is the renewal of a P20 million loan with Manila First Bank. The big trouble he fears is the lack of funds necessary to repay the existing debt and few, if any, prospects for raising the funds elsewhere. Mr. Santos had just hung up the phone after a conversation with a bank vice-president in which it was made clear that this year's statement of cash flows must look better than last year's. Mr. Santos knows that improvements are not on course to happen. In fact, cash flow projections were dismal. Later that day, Timothy Dela Cruz, assistant controller, was summoned to Mr. Santos's office. "Dela Cruz," Santos barked, "I've looked at our accounts receivable. I think we can generate quite a bit of cash by selling or factoring most of those receivables. I know it will cost us more than if we collect them ourselves, but it sure will make our cash flow picture look better." Required: Discuss the following: 1. Facts of the case 2. The ethical issue and the stakeholders 3. Values involved 4. Alternative course of actions 5. Evaluation of alternatives in terms of values 6. Possible consequences of alternatives 7. Decision
Transcribed Image Text:ETHICAL DILEMMA "We must get it," Erickson Santos, president of Industrial Fasteners, roared. "Without it, we're in big trouble." The "it" Mr. Santos referred to is the renewal of a P20 million loan with Manila First Bank. The big trouble he fears is the lack of funds necessary to repay the existing debt and few, if any, prospects for raising the funds elsewhere. Mr. Santos had just hung up the phone after a conversation with a bank vice-president in which it was made clear that this year's statement of cash flows must look better than last year's. Mr. Santos knows that improvements are not on course to happen. In fact, cash flow projections were dismal. Later that day, Timothy Dela Cruz, assistant controller, was summoned to Mr. Santos's office. "Dela Cruz," Santos barked, "I've looked at our accounts receivable. I think we can generate quite a bit of cash by selling or factoring most of those receivables. I know it will cost us more than if we collect them ourselves, but it sure will make our cash flow picture look better." Required: Discuss the following: 1. Facts of the case 2. The ethical issue and the stakeholders 3. Values involved 4. Alternative course of actions 5. Evaluation of alternatives in terms of values 6. Possible consequences of alternatives 7. Decision
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