Ethics: Suspicions, Guesses, and Conjectures. Joan Arch, board of directors chairperson, never worried about cash flows until recently. Joan is not active in the day-to-day activities of the firm. She has heard some rumors that concern her. Profits had been strong for the prior five years. She did see a yearend bank statement that showed a near zero balance. The following data are from this year's financial statements. No other current data are available to her.

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1. Suggest two scenarios of what could be happening. What facts support your theories?
2. Of the data that Joan probably already has in her files and given what you know, what additional data would you like to see immediately?

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Sales. Cost of goods sold Gross margin... Operating expenses. Net loss. $450,000 (350,000) $ 100,000 (124,000) $ (24,000)