MCB Company experienced a significant increase in sales as a result of its new promotional campaign. Yesterday, however, it realized that because most of those sales were on credit, it did not have enough money in the bank to pay this month's bills. MCB can take care of this situation temporarily by
A) obtaining long-term financing.
B) disallowing credit sales.
C) selling commercial drafts.
D) obtaining short-term financing.
E) issuing stock.

Question

Quizplus · Accepted Answer

Since the issue is temporary and the sales are on credit, which means the payment will eventually come in, obtaining short-term financing will help MCB pay its bills until the credit payments are received. Disallowing credit sales or selling commercial drafts may harm the company's sales and profitability, and obtaining long-term financing is not necessary for a temporary issue. Issuing stock is not a suitable solution for short-term cash flow problems.

MCB Company Experienced a Significant Increase in Sales as a Result