Before investors lenders and prospective customers associate with a company they will consider the company’s financial reports and try to project the future profitability

Is it ever ethical or necessary for a company to manipulate their profitability? Why or why not?Explain

 

Financial Statement Analysis

Description

Before investors lenders and prospective customers associate with a company they will consider the company’s financial reports and try to project the future profitability of a company. Current and prospective employees are also incentivized by potential profit sharing of a successful company. These and other factors serve as reasons for a company to manipulate financial reports to project unrealistic or even false earnings. Provide an example of a company that has previously committed financial fraud.

Answer the following questions when considering the surrounding circumstances of the company:

Is it ever ethical or necessary for a company to manipulate their profitability? Why or why not?

What might have caused this company to have to manipulate financial information?

What was the ultimate outcome for this company?