Ethics Case 19–7 International Network Solutions ● LO6
International Network Solutions provides products and services related
to remote access networking. The company has grown rapidly during its
first 10 years of operations. As its segment of the industry has begun
to mature, though, the fast growth of previous years has begun to slow.
In fact, this year revenues and profits are roughly the same as last
year.
One morning, nine weeks before the close of the fiscal year, Rob
Mashburn, CFO, and Jessica Lane, controller, were sharing coffee and
ideas in Lane’s office.
Lane: About the Board meeting Thursday. You may be right. This may be the time to suggest a share buyback program.
Mashburn: To begin this year, you mean?
Lane: Right! I
know Barber will be lobbying to use the funds for our European
expansion. She’s probably right about the best use of our funds, but we
can always issue more notes next year. Right now, we need a quick fix
for our EPS numbers.
Mashburn: Our shareholders are accustomed to increases every year.
Required:
1. How will a buyback of shares provide a “quick fix” for EPS?
2. Is the proposal ethical? 3. Who would be affected if the proposal is implemented?
