IMANET CMA Exam - Topic 6 Question 60 Discussion

Actual exam question for IMANET's CMA exam

Question #: 60
Topic #: 6

MEC Corporation has 100,000 shares of stock outstanding. Below is part of Mac's Statement of Financial Position for the last fiscal year.

What is the maximum amount MEC can pay in cash dividends per share and maintain a minimum current ratio of 2 to 1? Assume that all accounts other than cash remain unchanged.

A$2.05

B$2.50

C$3.35

D$3.80

Show Suggested Answer

Suggested Answer: C

Decentralization results in greater speed in making operating decisions because they are made by lower-level managers instead of being referred to top management. The quality of operating decisions should also be enhanced, assuming proper training of managers, because those closest to the problems should be the most knowledgeable about them.

by Melodie at Oct 24, 2022, 04:30 PM

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Matthew

8 months ago

$3.80? That sounds way too high!

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Alease

8 months ago

Wait, can they really pay that much and keep a 2:1 ratio?

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Katie

9 months ago

$2.50 seems reasonable to me!

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Carman

9 months ago

I think the current ratio is crucial here.

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Weldon

9 months ago

MEC has 100,000 shares outstanding.

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Willard

9 months ago

I think I recall that we need to ensure cash after dividends still meets the current ratio requirement. I just can't remember the exact numbers we used in practice.

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Lisandra

9 months ago

I feel like I might be overthinking this. If the current ratio needs to be 2 to 1, does that mean we can only pay dividends if cash is double the current liabilities?

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Christene

9 months ago

This question seems similar to one we practiced about dividend payouts and liquidity. I think we need to focus on the cash balance and current liabilities.

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Ernestine

9 months ago

I remember we discussed current ratios in class, but I'm not entirely sure how to calculate the maximum dividends while maintaining that ratio.

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Chanel

9 months ago

This question seems straightforward. I'm pretty confident I can identify the incorrect statement about Hive and other Hadoop components.

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Catina

10 months ago

I'm not sure about AutoCreate Purchase Orders - does that really use the employee record?

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Elin

1 year ago

I know the answer is C) $3.35, but I can't help but wonder if MEC's CEO is secretly hoping for option D) $3.80. You know, just to treat themselves to a little extra vacation time. Hey, a guy's gotta live a little, right?

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Sharan

1 year ago

Ah, the classic current ratio question. I'm confident that C) $3.35 is the right answer here. It's always important to maintain a healthy current ratio, even if it means sacrificing a few bucks in dividends. After all, you can't buy a Lamborghini with a bad current ratio, right?

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Paulina

1 year ago

So, C) $3.35 it is then. Thanks for the clarification!

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Ben

1 year ago

No, I don't think so. The current ratio needs to be maintained at 2 to 1.

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Rozella

1 year ago

But what about B) $2.50? Could that also be a possible answer?

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Rebecka

1 year ago

I think you're right, C) $3.35 seems like the correct choice.

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Jerry

1 year ago

Hmm, this is a tricky one. I'm torn between B) $2.50 and C) $3.35. I'll have to double-check my calculations, but I think C) is the correct answer. Gotta love these financial accounting questions, they really keep you on your toes!

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Steffanie

1 year ago

I'm leaning towards C) $3.35, but I'll double-check my calculations.

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Mattie

1 year ago

I agree, I also calculated it to be B) $2.50.

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Taryn

1 year ago

I think B) $2.50 is the correct answer.

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Cordie

1 year ago

I'm leaning towards option D) $3.80. That seems a bit high, but the question specifically says 'maximum amount' that MEC can pay, so I'm going with the higher option. I hope I'm not missing something crucial here.

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Marisha

1 year ago

User3: But the question does say it's the maximum amount MEC can pay.

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Stephanie

1 year ago

User2: I agree, it does seem high.

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Ena

1 year ago

User1: I think option D) $3.80 is too high.

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Luann

1 year ago

But if we calculate based on the current ratio, it seems like D) $3.80 could be the correct answer.

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Sharee

1 year ago

Based on the information provided, I believe the answer is C) $3.35. This is the maximum amount that MEC can pay in cash dividends per share and maintain a minimum current ratio of 2 to 1. The key is to keep the current ratio at 2 to 1, which means the current assets should be twice the current liabilities.

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