Question

(TCO 1) Provide three examples of situations in which business ethics play a role in the financial management process. Explain your rationale, and how these situations may affect the value of the firm.

Answer 1

The situations where the following the business ethics would help the financial management process could be :

a) Following the credit policy of the recovery of accounts receivables. The recovery of the receivables will keep the cash flow smooth.

b) Following the production process as defined by the planning and marketing department. The follow-up of production plans will make the payment schedule to be correctly defined.

c) The financial ethics regarding the following the financial plans would benefit the company. The raising of the funds and payment of the debt schedule will be ethically followed.

Following ethically all the advantageous situations of the financial process will provide lower cost of interest and higher profit to the company and the owner. It will raise social values of the company as it fulfulls all the delivery committments and payments promises.

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