Question Details

Flint Hills Company's most recent financial statements 




1
How is it possible for a company to suffer a net loss for a given year, yet produce a positive net cash flow from operating activities?


2	(Ethics)
Flint Hills Company's most recent financial statements showed dismal performance. There was a net loss of $10,000 and the statement of cash flows showed a net cash decrease in all categories. The company president called all the managers together and asked them to do all they could to make sure the next quarter's performance was better.

Ed Gray, manager of the manufacturing division, sold off old manufacturing equipment. He also reclassified several workers to part time (30 hours per week) and hired additional temporary workers to take up the slack. This saved the company money, since part-time workers do not have the same insurance and other benefits as full-time workers.

Mike Cane, financial manager, immediately suspended payments on all accounts except those on which interest would accrue. He also instituted aggressive collection procedures.

Required:
1.	Were Ed Gray's actions ethical?  Explain.
2.	Were Mike Cane's actions ethical?  Explain.
3.	Were the company president's actions ethical?  Explain.




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