would increase net income . Return on assets would be increased by not acquiring any new fixed assets . Production levels for inventory could be increased , thus spreading fixed costs over a greater number of units and reducing the total average cost per unit . Therefore , gross profit per unit will increase . Inventory levels would be a little bloated , but that should be easily handled by Dan ' s successor .
The prior examples are subtle changes that could be made . As a last resort , a change in accounting methods could be employed . This would require explicit footnote disclosure and a comment in the auditor ' s report , but if it came to that , it would still be tolerable . Examples of such changes would be to switch from accelerated to straight-line depreciation or to change from LIFO to FIFO .
How to make changes to the financial results of the company appeared easier than he first thought . Now back to the other potential problem of “ getting away with it .” At first thought , Dan considered the degree of resistance by the other members of top management . Mike Harrington , Dan ' s chief financial officer , would have to review any accounting changes that he suggested . Since Dan had brought Mike up the organization with him , Dan didn ' t foresee any strong resistance from Mike . As for the others , Dan believed he had two things going for him . One was their ambition . Dan knew that they all coveted his job , and a clear successor to Dan had yet to be chosen . Dan would only make a recommendation to the promotion committee of the Board of Directors , but everyone knew his recommendation carried a great deal of weight . Therefore , resistance to any accounting changes by any individual would surely end his or her hope to succeed him as CEO . Secondly , although not as lucrative as Dan ' s , their bonus package is tied to the exact same accounting numbers . So any actions taken by Dan to increase his compensation will also increase theirs .
Dan was actually beginning to enjoy this situation , even considering it one of his final challenges . Dan realized that any changes he implemented would have the tendency to reverse themselves over time . That would undoubtedly hurt the company ' s performance down the road , but all of his potential successors were in their mid-to-late 50s , so there would be plenty of time for them to turn things around in the years ahead . Besides , any near-term reversals would