Professor and Class, For this week’s Ethics Lesson, we are given the following scenario, and asked to analyze the situation. “Cash flow per share may appear to be a valuable measurement of the operating success of a business. However, it can be misinterpreted by users of the financial statements.” Linda Stern, president of Venician Fashions, Inc., believes that reporting operating cash flow per share on the income statement would be a useful addition to the company’s just completed financial statements. A discussion Linda had with Ben Trotter, the controller of Venician Fashions, Inc., convinced him that this was a good idea. Ben begin working on the idea, without hesitation. With this scenario and conversation in mind, we are asked the following questions. 1) How would you interpret this situation? I’d say that Ben let Linda convince him of a very bad idea, regardless of how good the idea may look. Linda thinks she is helping, and so does Ben. However, just because they think something is a good
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