Table of Contents

1. Problems…………………………………………………………..2
2. Synonym…………………………………………………………..2
2.1. The stakeholder…………………………………………...……2
2.2. How to calculate net profit?........................................................2
2.3. Ethics in Business……………………………………………...3
3. Solution……………………………………………………………3
4. Conclution…………………………………………………………4

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 1. Problems
Scenario
Diaz Co. is a manufacturer of home and office furniture. Regarding the
estimate of uncollectible accounts expense, the financial controller of Diaz Co.
believes that the yearly allowance for doubtful accounts for Diaz Co. should be 2%
of net credit sales. The president of Diaz Co., nervous that the stakeholders might
expect the company to sustain its 10% growth rate, suggests that the controller
increase the allowance for doubtful accounts to 4%. The president thinks that the
lower net income, which reflects a 6% growth rate, will be a more sustainable rate
for Diaz Co.
Instructions
(a) Who are the stakeholders in this case?
(b) Does the president’s request pose an ethical dilemma for the controller?
(c) Should the controller be concerned with Diaz Co.’s growth rate? Explain
your answer.

2. Synonyms
2.1. The Stakeholders
A stakeholder is a party that has an interest in a company and can either
affect or be affected by the business. The primary stakeholders in a typical
corporation are its investors, employees, customers, and suppliers. However, with
the increasing attention on corporate social responsibility, the concept has been
extended to include communities, governments, and trade associations. 
Stakeholders can be internal or external to an organization.
+) Internal stakeholders are people whose interest in a company comes
through a direct relationship, such as employment, ownership, or investment.
+) External stakeholders are those who do not directly work with a company
but are affected somehow by the actions and outcomes of the business. Suppliers,
creditors, and public groups are all considered external stakeholders.

2.2. How to calculate net profit?

Net profit is the measurement of a company's profit once operating costs,
taxes, interest and depreciation have all been subtracted from its total revenues.

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The term is often referred to as a company's 'bottom line' and may also be
described as 'net earnings' or 'net income'.
Total revenue - total expenses = net profit
Net profit shows:
 Total revenue
 All cash flows go
 Additional income stream
 Cost of goods sold and other operating expenses
 Debt payments include interest paid
 Investment income and secondary operating income
 One-time payments for extraordinary events like lawsuits and taxes
2.3. Ethics in Business
Business ethics is the study of appropriate business policies and practices
regarding potentially controversial subjects including corporate governance,
insider trading, bribery, discrimination, corporate social responsibility, and
fiduciary responsibilities. The law often guides business ethics, but at other times
business ethics provide a basic guideline that businesses can choose to follow to
gain public approval.

3. Solutions
3.1. Who are the stakeholders in this case?
The stakeholders in this case are: Controller, President of Diaz Co.'s as he is
the chief executive officer of the company and he's the one who is driving the
business of the company and he's the ultimate executive authority in the company  ,
Shareholders, Bank and all the users of financial statements are the stakeholders

3.2. Does the president’s request pose an ethical dilemma for the
controller?
Yes, the President's request poses an ethical dilemma for the controller.
Because of the misleading financial statements (understanded net income) per the
president’s suggestion, the controller faces an ethical dilemma.
Companies must accurately report net income which in turn affects the
growth rate percentage. Net income growth provides a perfect picture of the rate at
which companies have grown their profits. All things being equal, stocks with
higher net income growth rates are often more desirable than those with slower
net-income growth rates.

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 3.3.  Should the controller be concerned with Diaz Co.’s growth
rate? Explain your answer.
Yes, the controller should be concerned about Diaz Co.’s growth rate as the
growth rate must be based on reasonable and accurate financial statements,
together with the truthfulness of the specific figures contained in the reports
financial statements. The controller should not prepare financial statements per the
president’s objective of achieving or sustaining a predetermined growth rate  at
their discretion. The growth rate of Diaz Co.’s should be based on management
and operating results of financial expenditure, human resources,  and not because
of manipulated accounting.

4. Conclusion
In my opinion, to protect the interests of the company and also to not
mislead stakeholders by reflecting an incorrect net income the controller should
remain ethical in being transparent with the company and understand carefully the
factors that directly and most affect net profit such as operating costs of the
business (controllers need to intelligently minimize costs for the business to help
increase again net export to the company), the cost of the product and service (the
controller needs to research the market carefully, find many sources of goods), and
corporate income tax (This tax can not be increased or decreased according to the
wishes of the business owner. Therefore, if you want to make a profit, you need to
raise the selling price of the product. Or choose a solution to reduce expenses) .

So, enterprises need to improve the capacity of employees in the system.

This will create products that can be exchanged for money. Even creating high-
value products. Enterprises must renew and increase production scale. To increase
labor productivity and create more product value, enterprises need to apply science
- technology in production and business. Enterprises need to have contingency
plans in business. The contingency plan here can be understood as a smaller, sub-
sector business to support core business development.