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Explain what types of financial and management goals Medi-Supply might have as the company moves forward to look for investors. (75–150 words, or 1–2 paragraphs)

Explain how Medi-Supply can avoid unethical practices in its financial reporting methods. Be sure to provide information on handling material non-public information correctly, developing an internal process for reporting unethical activities, reporting revenue appropriately, showing accurate debt with balance sheets that are balanced, and avoiding hidden reserves. Additionally, describe at least two other unethical financial reporting methods that could impact customers or shareholders. (225–300 words, or 3–4 paragraphs)

Sample Paper For Above instruction

Financial and Management Goals for Medi-Supply

As Medi-Supply seeks to expand regionally and nationally, the company's primary financial goals include increasing revenue streams, enhancing profitability, and securing sustainable growth. To attract investors, Medi-Supply aims to demonstrate strong financial stability through accurate financial statements, robust cash flow management, and prudent debt management. Management goals focus on optimizing operational efficiencies, maintaining high-quality product standards, and fostering innovation to stay competitive in the medical device industry. Strategic objectives also include strengthening relationships with current hospital clients while expanding into new markets, necessitating a commitment to ethical financial reporting to build investor confidence and support long-term success.

Ensuring Ethical Financial Reporting Practices at Medi-Supply

Medi-Supply can avoid unethical practices by establishing comprehensive internal controls that promote transparency and accountability. One key measure involves handling material non-public information (MNPI) correctly; this information must be kept confidential and only shared with authorized personnel to prevent insider trading and market manipulation. Developing an internal whistleblowing policy encourages employees to report unethical behaviors without fear of retaliation. It is essential to establish clear guidelines for revenue recognition to ensure revenues are recorded only when earned and realizable, avoiding premature or fictitious entries that inflate earnings artificially.

Furthermore, Medi-Supply should maintain accurate and balanced balance sheets, ensuring that assets equal liabilities plus shareholders’ equity, thus upholding accounting principles of completeness and accuracy. Avoiding hidden reserves—undisclosed profits set aside for future periods—protects investors from misleading financial health indicators. To combat potential unethical practices, the company should implement regular internal audits and external financial audits to verify compliance with accounting standards and detect any discrepancies or irregularities early.

Two additional unethical financial reporting methods that could jeopardize stakeholders include earnings management and the manipulation of expenses. Earnings management involves deliberately adjusting financial results to meet targeted earnings benchmarks, which can mislead investors about the company's true performance. For example, delaying expenses or prematurely recognizing revenue can create a false appearance of profitability. Manipulating expenses, such as capitalizing expenses that should be expensed immediately, inflates net income figures, misleading shareholders and customers about the company's financial health.

Both practices compromise stakeholder trust and can have legal consequences if discovered. Transparent disclosures and adherence to Generally Accepted Accounting Principles (GAAP) are fundamental to maintaining ethical standards and ensuring that financial reports accurately reflect Medi-Supply’s actual financial position. By fostering an ethical culture and establishing strict internal controls, Medi-Supply can build credibility with investors, regulators, and its customers, paving the way for sustainable growth and operational integrity.

References

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