Ethics and Ratio Manipulation. Assume that Woodhouse Enterprises has 20 divisions reporting to a corporate office. A number of services such as data processing, cash management, personnel, and legal are performed at the corporate office. Most accounting is done at the division level. Corporate evaluates the earning-power ratios to rank divisions. The corporate capital multipler is used by each division. Only traceable assets are assigned to the division. Corporate expenses are not allocated to the divisions.

\section*{Required:}

Assume that Division 15 is an average performing division. Using the earningpower ratios, how might the division manager and division controller work to make the division "look good" on paper? On a short-term basis? On a long-term basis?