Case 15-67 Manipulation of Ratios and Ethical Behavior

Pete Donaldson, president and owner of Donaldson Mining Supplies, was concerned about the firm’s liquidity. He had an easy time selling supplies to the local coal mines, but had a difficult time collecting the receivables. He had even tried offering discounts for prompt payment. The outcome wasn’t as expected. The coal mines still took as long to pay as before, but took the dis- count as well. Although he had complained about the practice, he was told that other suppliers would provide the supplies for the same terms. Collections were so slow that he was unable to pay his own payables on time and was receiving considerable pressure from his own creditors.

The solution was a line of credit that could be used to smooth his payment patterns. Getting the line of credit was another matter, however. One bank had turned him down, indicating that he already had too much debt and that his short-term liquidity ratios were marginal. Pete had begun the business with $5,000 of his own capital and a $30,000 loan from his father-in-law. He was making interest payments of $3,000 per year to his father-in-law, with a promise to pay the principal back in 5 years (3 years from now).

While mulling over his problem, Pete suddenly saw the solution. By changing accountants, he could tell the next accountant that the $30,000 had been donated to the business and therefore would be reclassified into the equity section. This would dramatically improve the debt ratio. He would simply not disclose the $3,000 annual payment—or he could call it a dividend. Additionally, he would not tell the next accountant about the $6,000 of safety gear that was now obsolete. That gear could be added back, and the current ratio would also improve. With an improved financial statement, the next bank would be more likely to grant the needed line of credit.

Required:

1. Evaluate Pete Donaldson’s ethical behavior.

2. Suppose that you have been hired as the chief finance officer for Donaldson Mining

   Supplies. You have been told that the $30,000 has been donated to the company. During the second week of your employment, the father-in-law drops in unexpectedly and introduces himself. He then asks you how the company is doing and wants to know if his $30,000 loan is still likely to be repaid in 3 years. Suppose also that on the same day you overhear an employee mention that the safety equipment is no longer usable because regulations now require a newer and different model.

a. Assume that you have yet to prepare the financial statements for the loan application. What should you do?

b. Suppose that the financial statements have been prepared and submitted to the bank. In fact, that morning, you had received a call from the bank, indicating that a decision was imminent and that the line of credit would likely be approved. What should you do under these circumstances?

3. Suppose that Pete invites you in as a consultant. He describes his problem to you. Can you think of a better solution?

Case 10.1

"Pauline McKee, an 87-year-old grandmother, was attending a family reunion at the Isle Casino Hotel Waterloo, a combination hotel and casino. One evening she and several members of her family gambled at the casino. McKee was playing a penny slot machine called “Miss Kitty.” A person wins at the Miss Kitty game by lining up different combinations of symbols from left to right on the slot machine screen. The game includes a button entitled “Touch Game Rules” in the lower left-hand corner of the screen. Tapping this button displays the rules that govern the game and a chart describing potential winning combinations of symbols. These rules do not mention any additional bonus, jackpot, or prize available to a person playing the Miss Kitty game. The rules state “MALFUNCTION VOIDS ALL PAYS AND PLAYS.” A sign posted on the front of the machine reiterates “MALFUNCTION VOIDS ALL PAYS AND PLAYS.” McKee did not read the rules before she played the slot machine.

While playing the game, McKee won $1.85 based on how the symbols had lined up on the slot machine screen. However, at the same time a message appeared on the screen stating “Bonus Award $41797550.16.” The casino paid McKee $1.85 but refused to pay the alleged bonus, claiming it was an error and not part of the game. McKee sued the casino in district court to recover $41,797,550.16. The casino introduced evidence that the appearance of the bonus on the screen was an error in the computer system of the game. The casino made a motion for summary judgment, which was opposed by McKee. The district court held that the rules of the Miss Kitty game were an express contract between McKee and the casino. The court granted summary judgment to the casino. McKee appealed.

Issue

Was there a contract between the parties that provided for the payment of a bonus when playing the Miss Kitty slot machine?

Language of the Court

Gambling contracts are governed by traditional contract principles. We agree with the district court that the Miss Kitty rules of the game are the relevant contract here and that they form an express contract. Further, it is undisputed the rules of the Miss Kitty game did not provide for any kind of bonus. Hence, in our view, McKee had no contractual right to a bonus. Nor is it relevant that McKee failed to read the rules of the game before playing it. It is sufficient that those rules were readily accessible to her and she had an opportunity to read them. On the play in question, the alignment of the reels entitled McKee to a prize of $1.85, and the casino paid it to her, fulfilling its side of the contract.

Decision

The Supreme Court of Iowa affirmed the district court’s grant of summary judgment in favor of the casino."

Read Case 10.1 in your text.

A) Do you think the Court ruled correctly? Why or why not?

B) What does the term "a contract is a contract is a contract" mean and how does it relate to this case?

C) Identify two (2) other examples when people may not read rules or provisions of service that may affect them if there is a problem.

D) Pick an ethical principle that the casino followed by not paying the bonus.

Submit a 3-4 page written paper following the APA format, exclusive of the title and reference pages. The Abstract is not required or needed. Papers should be double spaced in Times New Roman font and 12 point size. The paper must cite at least one other validated (peer-reviewed) source independent of the textbook.

In this paper, please discuss the following case study. For you to complete this assignment you must:

• Explain your approach to the problem.
• Support your approach with references, and execute your approach.
• Provide an answer to the case study’s questions with a recommendation.

This case continues following the new project of the WePROMOTE Company, that you and your partner own. WePROMOTE is in the promotional materials business. The project being considered is to manufacture a very unique case for smartphones. The case is very durable, attractive and fits virtually all models of smartphone. It will also have the logo of your client, a prominent, local company and is planned to be given away at public relations events by your client.

As we know from the prior case involving this company, more details of the project become apparent and with more precision and certainty.

The following are the final values to the data:

• The cost of the equipment will be $70,000 and this cost is incurred prior to any cash is received by the project.
• The expected annual cash revenue of the project will be $30,000.
• The expected annual cash outflows (expenses/costs) are estimated at being $11,000, excluding depreciation.
• Your tax rate is 30% and you plan to depreciate the equipment on a straight-line basis for the life of the equipment. The discount rate you are assuming is 6%.
• After 5 years the equipment will stop working and there will be no salvage value.

Requirements of the paper:

• Perform the final NPV calculations and provide a narrative on how you calculated the computations and why (justification of answer).
• Present your calculated answers in schedule format (a table) along with your narrative. Microsoft Excel is also recommended for calculating and creating a table (your schedule).
• Then provide a summary conclusion on whether you should continue to pursue this business opportunity.
• Research, using at least one other sources other than the textbook materials that support your calculations and conclusions.

Papers will be assessed on the following criteria:

• Provide the final, accurate NPV calculations.
• A narrative on how the NPVs were calculated. The narrative should include how the data relating to depreciation and its tax consequences affect the cash flow of the project. Include a table with your analysis to present your work.
• Provide a conclusion on whether this business opportunity should be pursued.

Is there a relation between police protection and fire protection? A random sample of large population areas gave the following information about the number of local police and the number of local fire-fighters (units in thousands). (Reference: Statistical Abstract of the United States.)

Use a 5% level of significance to test the claim that there is a monotone relationship (either way) between the ranks of number of police and number of firefighters.

(a) Rank-order police using 1 as the largest data value. Also rank-order firefighters using 1 as the largest data value. Then construct a table of ranks to be used for a Spearman rank correlation test.

(b) What is the level of significance?

State the null and alternate hypotheses.

H_o: ρ_s < 0;  H₁: ρ_s = 0H_o: ρ_s = 0; H₁: ρ_s > 0     H_o: ρ_s = 0;  H₁: ρ_s ≠ 0H_o: ρ_s = 0; H₁: ρ_s < 0

(c) Compute the sample test statistic. (Use 3 decimal places.)


(d) Find the P-value interval of the sample test statistic.
P-value <  ---Select--- 0.001 0.002 0.01 0.05

(e) Conclude the test.

At the α = 0.05 level, we reject the null hypothesis and conclude the data are not statistically significant.At the α = 0.05 level, we fail to reject the null hypothesis and conclude the data are not statistically significant.     At the α = 0.05 level, we reject the null hypothesis and conclude the data are statistically significant.At the α = 0.05 level, we fail to reject the null hypothesis and conclude the data are statistically significant.

(f) Interpret your conclusion in the context of the application.

Fail to reject the null hypothesis, there is sufficient evidence that a monotonic relationship exists between number of fire fighters and police.Fail to reject the null hypothesis, there is insufficient evidence that a monotonic relationship exists between number of fire fighters and police.     Reject the null hypothesis, there is sufficient evidence that a monotonic relationship exists between number of fire fighters and police.Reject the null hypothesis, there is insufficient evidence that a monotonic relationship exists between number of fire fighters and police.

You will design and create your own GUI application for the Bank project. This project should be designed and written by Java programming.

The requirements of the program:

1. The program will be best implemented as a multi-file program for each class.

2. The parameters and return types of each function and class member should be decided in advance. You may need to add more member variables and functions to the classes than those listed below. Also, you can throws any user-defined exceptions or any possible exceptions.

3. You will create the following class:

A. Design a generic class to hold the information about a Bank. Bank has customers

B. Design a class to hold the information about a Customer. A Customer has an account number and at least one/ or more banking account(s), and all the information about the customer.

C. Design an abstract class to hold the information about a BankingAccount. Balance, number of deposits this month, number of withdrawals, annual interest rate, monthly service charges, etc…

The class should have the following member functions: Constructor, deposit, withdraw, monthly process, etc…

D. Design a SavingsAccount class, derived from the generic BankingAccount class. If the balance of a savings account falls below $25, it becomes inactive. No more withdrawals may be made until the balance is raised above $25, at which time the account becomes active again.

The savings account class should have the following members functions for withdrawing, deposit, status, etc…

E. Next, design a CheckingAccount class, also derived from the generic BankingAccount class. Implement the base class’s withdraw function, this function will determine if a withdrawal (a check written) will cause the balance to go below $0. If the balance does below $0, a service charge of $15 will be taken from the account. If there isn’t enough in the account to pay the service charge, the balance will become negative and the customer will own the negative amount to the bank. service charge for the check written over 5 will add the monthly fee of $5 plus $0.10 per withdrawal (check written). if the check written is below and equal to 5 checks, it will be no charge.

F. Design and create a GUI BankGUIFrame class that allows the user to enter the customer’s information as well as the amounts of withdrawals and deposits for a saving account and checking account. The program should display statistics for the month, including beginning balance, the total amount of deposits, total amount of withdrawals, service charges, and ending balance. Use GUI components. Event handlings for some GUI components.

G. Write a driver BankGUITest class that demonstrates how each of conditions work.

H. The program also need to prevent any exceptions to occur.

Read the following research and summarize and answer the questions

Ethical issues related to caring for low birth weight infants

Abstract

Background:

Currently preterm births are the leading causes of newborn deaths and newborn mortality in developed countries. Infants born prematurely remain vulnerable to many acute complications and long-term disabilities. There is a growing concern surrounding the moral and ethical implications of the complex and technological care being provided to extremely low birth weight infants in neonatal intensive care units in the developed nations.

Research purpose:

The purpose of this study was to describe the ethical and moral issues that neonatal intensive care nurses experience when caring for low birth weight preterm infants and their families.

Research design:

A phenomenological method design was used to describe the lived experiences of nurses with ethical and moral issues encountered in the neonatal intensive care unit. One-on-one, semi-structured interviews using open-ended questions were used to gather data from the participants.

Research participants:

The setting for this study was a 97-bed neonatal intensive care. A total of 16 female nurses were interviewed.

Ethical considerations:

Approval to conduct the research study was obtained from the institutional review board of the hospital where the study was conducted. Formal signed consent was obtained from each participant. To ensure confidentiality, each participant was asked to choose a confederate name to be used in the interview and the transcriptions.

Findings:

The thematic analysis identified five recurring themes: (a) at the edge of viability, (b) infant pain and discomfort, (c) crucial decisions, (d) communicating with parents, and (e) letting go.

Conclusion:

Neonatal intensive care unit nurses indicated that they often had challenges to their own sense of morality as they struggled to protect the infant from pain and unnecessary discomfort, provide care to an infant and their family whom they thought was faced with a lifetime of challenges and poor health, accepting decisions made by parents, and feeling as if parents were not adequately informed about outcomes.

.What problem was this study designed to address and is it an important one to nursing?

What is the main research question?

What study design used in this study?

a. What qualitative method is used in this study?

a. Is the way of obtaining subjects appropriate? Is the sample size appropriate for this type of study?

b. Is the setting in which data were collected an appropriate one for this study?

a. Are the methods used appropriate for a qualitative research study?

c. Were steps taken to protect the rights of study subjects?

d. What evidence is there that data saturation was achieved?

a. What procedures were used to analyze the type of data collected?

b. What were the study findings?

Do bonds reduce the overall risk of an investment portfolio? Let x be a random variable representing annual percent return for the Vanguard Total Stock Index (all Stocks). Let y be a random variable representing annual return for the Vanguard Balanced Index (60% stock and 40% bond). For the past several years, assume the following data. Compute the coefficient of variation for each fund. Round your answers to the nearest tenth.

Select one:

a. for x-values: 108.6%, and for y-values: 132.4%

b. for x-values: 194.1%, and for y-values: 236.8%

c. for x-values: 132.4,% and for y-values: 194.1%

d. for x-values: 108.6%, and for y-values: 236.8%

e. for x-values: 194.1%, and for y-values: 132.4%

John runs a computer software store. He counted 124 people who walked by his store in a day, 50 of whom came into the store. Of the 50, only 24 bought something in the store. Estimate the probability that a person who walks by the store will come in and buy something. Round your answer to the nearest hundredth.

Select one:

a. none of these choices

b. 0.19

c. 0.60

d. 0.48

e. 0.14

What percentage of the general U.S. population have bachelor's degrees? Suppose that the Statistical Abstract of the United States, 120th Edition, gives the following percentage of bachelor's degrees by state. For convenience, the data are sorted in increasing order.

Illinois has a bachelor's degree percentage rate of about 18%. Into what quartile does this rate fall?

Select one:

a. second quartile

b. third quartile

c. first quartile

d. first quartile as well as second quartile

e. none of these choices

You draw two cards from a standard deck of 52 cards and do not replace the first one before drawing the second. Find the probability of drawing a 7 for the first card and a king for the second card. Round your answer to the nearest thousandth.

Select one:

a. 0.155

b. 0.019

c. 0.006

d. 0.039

e. 0.083

Please make an Array-based implementation of a Binary Tree in Python based on the given file below. Make sure to keep the Abstract Data File of the starter code below when building the Array-based implementation.

Python Starter Code Given Below:

class ArrayBinaryTree(BinaryTree):
    """Linked representation of a binary tree structure."""

    # -------------------------- nested _Node class --------------------------
    class _Node:

        def __init__(self, element, parent=None, left=None, right=None):

    # -------------------------- nested Position class --------------------------
    class Position(BinaryTree.Position):
        """An abstraction representing the location of a single element."""

        def __init__(self, container, node):

        def element(self):

        def __eq__(self, other):

    # ------------------------------- utility methods -------------------------------
    def _validate(self, p):
        """Return associated node, if position is valid."""

    def _make_position(self, node):
        """Return Position instance for given node (or None if no node)."""

    # -------------------------- binary tree constructor --------------------------
    def __init__(self):
        """Create an initially empty binary tree."""

    # -------------------------- public accessors --------------------------
    def __len__(self):
        """Return the total number of elements in the tree."""

    def root(self):
        """Return the root Position of the tree (or None if tree is empty)."""

    def parent(self, p):
        """Return the Position of p's parent (or None if p is root)."""

    def left(self, p):
        """Return the Position of p's left child (or None if no left child)."""

    def right(self, p):
        """Return the Position of p's right child (or None if no right child)."""

    def num_children(self, p):
        """Return the number of children of Position p."""

    # -------------------------- nonpublic mutators --------------------------
    def _add_root(self, e):
        """Place element e at the root of an empty tree and return new Position."""

    def _add_left(self, p, e):
        """Create anew left child for Position p, storing element e."""

    def _add_right(self, p, e):
        """Create a new right child for Position p, storing element e. Return the Position of new node. Raise ValueError if Position p is invalid or p already has a right child.
        """

    def _replace(self, p, e):
        """Replace the element at position p with e, and return old element."""

    def _delete(self, p):
        """Delete the node at Position p, and replace it with its child, if any.  Return the element that had been stored at Position p.Raise ValueError if Position p is invalid or p has two children.
        """

    def _attach(self, p, t1, t2):
        """Attach trees t1 and t2, respectively, as the left and right subtrees of the external Position p. As a side effect, set t1 and t2 to empty.
        Raise TypeError if trees t1 and t2 do not match type of this tree. Raise ValueError if Position p is invalid or not external.
        """

Suppose currently 10-year Treasury bond yields 1.2% and 10-year municipal bond offers 0.8% yield. Also, your federal income tax rate is 40% and state income tax rate is 14%. Calculate the risk premium (spread) of this municipal bond.

Show calc and steps

1. $100,000 Amortizing Loan

• 9% stated rate

• 20-year amortization

• 5-year balloon

• Annual Payments

a) Calculate annual payment

b) Calculate balloon payment

c) Value at 12% yield

d) Prepare an amortization table