Head Donuts Inc. is a retailer of designer headphones, earphones, and hands$-$free audio devices.Polly Ester, the company president, is reviewing the companys financial statements after the close of the fiscal year and is troubled that earnings decreased by $10\%.$ She shares her concerns with the companys chief accountant, Lucas Simmons, who points out that the drop in earnings was balanced by a $20\%$ increase in net cash flows from operating activities. Polly is encouraged by the increase in net cash flows from operating activities, but is worried that investors might miss this information because it is buried in the statement of cash flows.To make it easier for investors to find this information, she instructs Lucas to include an operating cash flow per share number on the face of the income statement, directly below earnings per share. While Lucas is concerned about using such an unconventional financial reporting tactic, he agrees to include the information on the income statement.Discussion Questions:Please answer the following questions and support your decisions.

Explain why.Why is Polly worried if net cash flows from operating activities increased by $20\%,$ although the company has a drop in earnings? Is Polly behaving ethically? Why or why not?Is Lucas behaving ethically and professionally?

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