ETHICAL DILEMMA The Astro Mill Company has several loans outstanding with a local bank. The debt agreements all contain a covenant stipulating that Astro must maintain a current ratio of at least 0.9. Diana Ross Cruz, company controller, estimates that the year-end current assets and current liabilities will be 4,200,000 and 4,800,000, respectively. These estimates provide a current ratio of only 0.875. Violation of the debt agreement will increase Astro's borrowing costs as the loans are renegotiated at higher rates. Diana Ross proposes to the company president that Astro purchase inventory of 600,000 on credit before year-end. This will cause both current assets and current liabilities to increase by the same amount, but the current ratio will increase to 0.9. The extra 600,000 in inventory will be used over the later part of next year. However, the purchase will cause warehousing costs and financing costs to increase. Diana Ross is concerned about the ethics of her proposal. What do you think? You are to prepare a written report discussing the following: 1. What are the relevant facts? 2. What are the ethical issues? 3. Who are the primary stakeholders? 4. What are the possible alternatives? 5. What are the practical constraints? 6. What actions should Diana Ross take? 7. Which alternatives would you choose if you were in her shoes and why?