. R-M Corp. An earnings quality problem. C. Stern, chief financial officer of R-M Corp., has just reviewed the current year's third- quarter financial results with company president R. Macon. R-M Corp. sets an annual tar- get for earnings growth of 12%. It now appears likely that the company will fall short of that goal and achieve only a 9% increase in earnings. This would have a potentially detri- mental impact on the firm's stock price. Macon has directed Stern to develop alternative plans to stimulate earnings during the last quarter in order to reach the 12% target. Stern has approached you, a recent finance graduate of a well-known southwestern busi- ness school, to make recommendations for meeting the firm's earnings growth objective during the current year. Discuss techniques that could be used to increase earnings. Differentiate between those that would

(a) Increase earnings but lower quality of reported earnings.

(b) Increase earnings and also have a positive "real" impact on the firm's financial position.