Financial Management and Free Cash Flow Case Study

Open, View, and/or
Download this Document

Total Length: 567 words ( 2 double-spaced pages)

Total Sources: 3

Page 1 of 2

Using the mini case information, write a -500-word report presenting potential ethical issues that may arise from expanding into other related fields. In your discussion, proactively strategize about possible expansion by explaining opportunities to promote ethical standards within your organization.With business, it is natural for management to have a desire for growth and expansion. Growth an expansion is what unpins many of the valuation models presented as justification to engage in acquisition activity. In addition, investors look at future growth as a critical input to their valuation methodologies. Higher growth can equate to higher multiples and justification for higher share prices.Growth however, does have ethical considerations as it relates to managements ability to steward shareholder capital. Ethically, management may use accounting tricks and gimmicks to portray a misleading picture of growth. Enron and Sunbeam both engaged in this activity as they attempted to mislead investors. Enron for example, used off-balance sheet entities to conceal liabilities that were used extensive to finance the company’s growth in earnings per share. Sunbeam using channel stuffing techniques to show an improvement in sales that was not occurring.

Stuck Writing Your "Financial Management and Free Cash Flow" Case Study?

View All Our Example Financial Management and Free Cash Flow Case Study

Have A Custom Example Essay Written

They were essentially ”Robbing Peter to pay Paul.” The pressure exerted by external shareholders combined with misplaced…

[…… parts of this paper are missing, click here to view the entire document ]

…growth can great ethical issues related to expansion.For one management may look to expand into unrelated fields with a promise of “synergies” or “lower costs.” To justify this, management with use aggressive assumptions and estimates that appear to validate the use of shareholder capital to expand into unrelated fields. This inevitably will end with the disaster once the departing CEO has left the company and has taking his stock options with him or her. Oher ethical issues related to expansion in other fields relates to outright fraud and abuse. Here Wells Fargo is often cited for unethical expansion. When entering new….....

Show More ⇣

     Open the full completed essay and source list


OR

     Order a one-of-a-kind custom essay on this topic


sample essay writing service

Cite This Resource:

Latest APA Format (6th edition)

Copy Reference
"Financial Management And Free Cash Flow" (2021, August 09) Retrieved July 3, 2025, from
https://www.aceyourpaper.com/essays/financial-management-cash-flow-2176541

Latest MLA Format (8th edition)

Copy Reference
"Financial Management And Free Cash Flow" 09 August 2021. Web.3 July. 2025. <
https://www.aceyourpaper.com/essays/financial-management-cash-flow-2176541>

Latest Chicago Format (16th edition)

Copy Reference
"Financial Management And Free Cash Flow", 09 August 2021, Accessed.3 July. 2025,
https://www.aceyourpaper.com/essays/financial-management-cash-flow-2176541
   

Open, View, and/or
Download this Document
order custom essay example