Question

The Coronavirus (COVID19) pandemic defined as global health crisis that consider being a great challenge since World War Two. In December 2019, the COVID19 phenomena appeared in a seafood market, Wuhan – China, while registered as a new disease officially on 7th of January 2020 (WHO, 2020)1 . Countries all over the world are battling with the spread of COVID19 through enormous amount of testing kits, mandate/by-choice quarantine of citizen and cancelling large events all over the world (WHO, 2020). Constantly, the battle against the COVID19 stressing all the resources of the countries. In other words, its pandemic goes beyond more than a global health crisis, it influence the social, educational, economic and political dimensions in the world, and creates related crisis in the future that require years to recover (UN, 2020)2 . Many of our great cities and communities are deserted as people stay indoors either by choice or government order, social life changed dramatically, shops theatres and restaurants closed during the pandemic. Assume you are a managerial accountant in a small and medium-sized perfume production company in Doha, which was established five years ago. In the current economic situation, the company is facing some financial challenges. The company's CEO held a meeting with you to discuss ways out of that crisis so that the company could survive and even compete under the current circumstances.

1. Discuss the various activities that the managerial accountant may be assigned to in the company in order to help the CEO make rational decisions under the current circumstances.

Answer 1

Various activities that I will be trying to communicate to the chief executive officer to make him undertake rational decisions are-

A. I'll help him to understand the importance of reduction of the debt at the current time in order to manage with businesses with a high level of liquidity so that the company is able to generate a higher cash flow and have flexibility in its operations

B. I will also make him understand about the cost cutting techniques so that he will be trying to cut upon various operating cost and he will be trying to reduce the overall cost of operation under current scenario and it should be leading to stability of profits.

C. I will be trying to make him understand about risk management theories so that he would be trying to maintain a proper proactive approach towards risk which are unfolding due to expectation of an impending recession in the economy

D. I will also be advising him to make the use of the situation by taking loans at lower interest rates because interest rates has been lowered in the economy and it will be helping him in order to maximize with the potential benefit in the long run.

E. I will be trying to help him understand about the importance of having a lower cash conversion cycle because it will be helping him in order to collect the cash and eliminate the problems related to the liquidity of the company.

F. I will also advise him to recover the cash from all such debts which are having a probability of turning bad in the longer period of time and not provide much of the flexible policy regarding collection of debt.