Question

As a Wall Mart controller, you are responsible for informing the board of directors about its financial activities and strengthens. At the board meeting, you present the following information only.

Current ratio; Quick ratio; Inventory Turnover, working capital, debt ratio and ROI Ratio

After the meeting, the company's CEO holds a press conference with Wall Street analysts in which she mentions only the above ratios on the list.

1. Why do you think the CEO decided to report only the above ratios instead of the all ratios prepared?
2. In your opinion, was the CEO's reporting of only the ratios selected ethical or unethical? Justify your response.
3. Who are the stakeholders in this situation?
4. Cite your references using APA format.

Answer 1

Wall Mart is in retail business. Each industry has a different set of financials that are important to it. as a retailer, the most important ratios for Wall Mart are inventory turnover and working capital cycles. Additionally, all the investors also like to look at the financial health of the company by looking at the debt ratio, current ratio and the quick ratio. For any of the investor, investing across industry, return on investment or return on capital is important for judging the long-term investment potential. The CEO has discussed all these ratios. The financial analysis can be done through a variety of ratios but the important ones are covered here. It should be kept in mind that the CEO is not required to discuss all the financials in a press conference. They can highlight the strong point in the press conference. There is no unethical behavior here, as long as all the information presented is factually correct. The company will of course publish the detailed financial statements and annual report to the larger audience once it is finalized. The CEO may discuss selective information in a press conference without trying or intending to mislead the investor community. The stakeholders here are the shareholders in Wall Mart, the investor community at large, the controllers and regulators, company management and employees, reporters, and indirectly the government as well.