In a business, the current ratio shows the relationship that exists between the current assets and liabilities of a company. In a company like Ross, current assets can often be converted into cash within a short period, for example, a year. This can be used in measuring the liquidity of a company. However, assets in a company can be regarding long-term assets, and short-term assets and a company’s management decides how to deal with these assets. Ross reclassification of long-term investments as short increased the current assets for the company which in turn improved the current ratio of the company. Current rate indicates the company's liquidity, and since Ross's set current ratio is 1.50, it means that they can pay back to their lenders and creditors. A higher current rate in the company suggests that its financial position has become stronger.
Ross's reclassification of investment from long-term to short-term is not unethical. This was inappropriately done to improving the business financial health so that the business financial obligations can be met. The current ration of the business has been enhanced due to the reclassification of the investments, and this has ensured that the management does not have to sell the company's investments. This actions by the administration are appropriate as they are saving the company from a further financial crisis. However, the debt agreements have limitations, and it all depends on the current ratio of the company. In Ross, the asset classification determines the current ratio of the company and this is done by the managers of the company who are led and guided by their intentions. However, in this case, the manager's purposes, in the long run, cannot be truly determined. Therefore, it is tough to determine whether the manager's actions are unethical.
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