Recently the M&M Company Has Been Having Problems

question 86

Multiple Choice

Recently the M&M Company has been having problems.As a result,its financial situation has deteriorated.M&M approached the First National Bank for a badly needed loan,but the loan officer insisted that the current ratio (now 0.5) be improved to at least 0.8 before the bank would even consider granting the credit.Which of the following actions would do the most to improve the ratio in the short run?

• A) Using some cash to pay off some current liabilities.
• B) Collecting some of the current accounts receivable.
• C) Paying off some long-term debt.
• D) Selling some of the existing inventory at cost.
• E) Purchasing additional inventory on credit (accounts payable).

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Definitions:

Frederick Herzberg

A psychologist best known for developing the Motivator-Hygiene Theory, which distinguishes between factors that create job satisfaction and those that prevent dissatisfaction.

Two-Factor Theory

A psychological theory proposed by Herzberg that suggests employee satisfaction and dissatisfaction are influenced by two separate sets of factors: motivators and hygiene factors.

Personal Rewards

Benefits or compensations received by an individual as a result of their actions or achievements, which can be intrinsic or extrinsic.

Status

The relative rank, prestige, or social standing of an individual or group within a society or organizational hierarchy.