May 2019 Q4 a.
Ethical issues arise even when the objective is clear. Financial Managers face tradeoffs fraught with ethical issues. Thinking through the tradeoffs and all the costs and benefits is important
Required:
Suggest ways in which ethical issues would influence the firm’s financial policies in relation to the following:
i) Shareholders; (2 marks)
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Providing timely and accurate information to shareholders on the company’s historical achievements and future prospects.
ii) Suppliers; (3 marks)
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- Paying fair prices.
- Attempting to settle invoices promptly.
- Cooperating with suppliers to maintain and improve the quality of inputs.
- Not using or accepting bribery or excess hospitality as a means of securing contracts with suppliers. (Any 3 points)
iii) Customers. (3 marks)
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- Charging fair prices.
- Offering fair payment terms.
- Honouring quantity and settlement discounts.
- Ensuring sufficient quality control process are built in that goods are fit for purpose. (Any 3 points)