Assume that you are the CEO of a small publicly traded company. The operating performance of your company has fallen bel

[answerhappygod]

Assume that you are the CEO of a small publicly traded company.
The operating performance of your company has fallen below market
expectations, which is reflected in a depressed stock price. At
your direction, your CFO provides you with the following
recommendations that are designed to increase your company's return
on net operating assets (RNOA) and your operating cash flows, both
of which will, presumably, result in improved financial performance
and an increased stock price. To improve net cash flow from
operating activities, the CFO recommends that your company reduce
Inventories (raw material, work-in-progress, and finished goods)
and receivables (through selective credit granting and increased
emphasis on collection of past due accounts). The CFO recommends
that your company lengthen the time taken to pay accounts payable
(lean on the trade) to increase net cash flows from operating
activities. Because your company's operating performance is already
depressed, the CFO recommends that you take a 'big bath'; that is,
write off all assets deemed to be impaired and accrue excessive
liabilities for future contingencies. The higher current period
expense will, then, result in higher future period income as the
assets written off will not be depreciated and your company will
have a liability account available to absorb future cash payments
rather than recording them as expenses. The CFO recommends that
your company increase the estimate of expected return on pension
investments. This will reduce pension expense and increase
operating profit, a component of net operating profit after tax
(NOPAT) and thus, of RNOA. The CFO recommends that your company
share ownership of its outbound logistics (trucking division) with
another company in a joint venture. This would have the effect of
increasing throughput, thus spreading overhead over a larger volume
base, and would remove the assets from your company's balance sheet
since the joint venture would be accounted for as an equity method
investment. Evaluate each of the CFO's recommendations. In your
evaluation, consider whether each recommendation will positively
impact the operating performance of your company or whether it is
cosmetic in nature.