In One of the Case Studies in the Textbook, Rita

question 20

Multiple Choice

In one of the case studies in the textbook, Rita Mae King was a purchasing agent at an electronics and appliance chain. She frequently worked with travel vendors and managed to put Spicewood Travel on the top of the preferred vendor list. Upon investigation, the fraud examiners discovered that she ran her own travel agency out of her office at the store and received kickbacks from Spicewood Travel in return for having her company use them to book trips. Why didn't the company pursue legal action against King?

• A) The company didn't want the publicity so they quietly let her resign.
• B) The vice president of loss prevention recommended against criminal action because of King's age and her husband's ill health.
• C) There was not enough evidence to pursue a conviction.
• D) Spicewood Travel agreed to reimburse the company for overcharges if they wouldn't pursue criminal action against King.

---

Definitions:

Cash Flows

The aggregated financial movements into and out of a venture, significantly affecting its availability of liquid assets.

Ratio Analysis

A quantitative analysis of information contained in a company's financial statements, used to evaluate the performance, liquidity, and solvency of the business.

Financial Position

A snapshot of a company’s financial condition at a specific moment in time, encompassing assets, liabilities, and equity.

Equity Multiplier

A financial ratio that measures the proportion of a company's total assets financed by its shareholders' equity.