Financial forecast
Nancy Tercek, the financial vice president, Margaret Lilly, the controller, of Romine Manufacturing Company are reviewing, the financial ratios of then company for theyears 2010 and 2011. The financial vice president notes that the profit margin on sales ratio has increased from 6% to 12%, a hefty gain for the 2-year period. Tercek is in the process of issuing a media release that emphasizes the efficiency of Romine Manufacturing in controlling cost. Margaret Lilly knows that the difference in ratio is due primarily to and earlier company decision to reduce the estimates of warranty and bad debt expense for 2011. The controller, not sure of her supervisor's motives, hesitates to suggest to Tercek that the company's improvement is unrelated to efficiency in controlling cost. To complicate matters, the media release is schedule in a few days. Do you think Lilly, the controller should remain silent? What, if any is the ethical dilemma in this situation? What stakeholders might be affected by tercek's media release.
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