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(b) Amin Software was a relatively new tech company led by aggressive founder Bir Amin. His strategy relied not so much on producing new products
(b) Amin Software was a relatively new tech company led by aggressive founder Bir Amin. His strategy relied not so much on producing new products as using new equity capital to buy up other software companies. To keep attracting investors, Amin had to show year-to-year revenue growth. When his normal revenue streams stalled, he resorted to the tried-and-true "channel stuffing" technique. First, he improperly recorded shipments to his distributors as sales revenue: these shipments far exceeded the market demand for his products. Then he offered the distributors large payments to hold the excess inventory instead of returning it for a refund. Those payments were disguised as sales promotion expenses. He was able to show a considerable growth in revenues for two years running until one savvy investor group started asking questions. That led to a complaint filed with the Security Exchange Commissioner. The company is now in bankruptcy, and several criminal cases are pending. Required: Discuss the factors that may have tipped off the investor group that something was wrong. In what way would those investors have been harmed? If Amin had attracted enough equity capital, explain your opinion whether he would have been able to conceal the scheme or not
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