The Manager of a Profit Center of a Large Electronics

question 29

Essay

The manager of a profit center of a large electronics manufacturing corporation made some projections regarding sales and profits for the upcoming final quarter of the year.The managers' performance evaluation and compensation depended significantly on his ability to meet budget goals.The manager discovered that the final quarter would have to be a particularly good quarter in order to meet these goals.He decided to implement a sales program offering liberal payment terms in order to pull some sales that would normally occur next year into the current year.Customers accepting delivery in the fourth quarter would not have to pay the invoice for 140 days.Also,he sold some equipment that was not being used and realized a significant profit on the sale.
Are these actions ethical? Why or why not?

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Definitions:

Short 100 Shares

The process of selling 100 shares that are not currently owned, with the expectation of buying them back at a lower price for a profit.

Initial Margin

The minimum amount of funds required to open a position in the futures market, intended to cover potential losses.

Maintenance Margin

The minimum amount of capital that must be maintained in a margin account after a purchase or trade, to cover the risk of loss.

Margin Call

A requirement from a broker for an investor to add more cash or securities to their account to mitigate potential losses.