Company x is a private company specialising in the retailing of furniture. The company has been investing substantially in capital projects and building its stock in the last few years. The VP of Operations is very keen to keep increasing the stock level as it provides a wide range of goods available for sale, and to continue spending on capital by opening new stores (the company has limited online presence to-date).

1)Comment on the view taken by the VP of Operations that the company should be increasing stock level and opening new stores. Take into account all key finance principles, concepts and theories which are relevant (Money has a time value,There is a risk-return trade-off,Cash flows are the source of value, Market prices reflect information, Individuals respond to incentives)

2)Also, 2020 was not a good year for Company x and 2021 started quite slow with the business seeing a large number of returns of furniture (refunds). The VP of Operations has proposed that these refunds be posted in the 2022 results to give some breathing space for 2021. Discuss the ethical implications of this proposal from the VP of Operations.