Accounts Manager Position

Accounts Manager Position

A proposal has been made at Diversico Management & Consulting Inc. to employ a person for the new position of Accounts Manager. The annual salary cost for the Accounts Manager position is projected to be $58,000. Before a person can be employed for the position of Accounts Manager, the Company president has demands that the Accounting Department at Diversico Management & Consulting Inc. provide evidence that the Company can afford to pay an additional $58,000 per year in salary for the new position.

The stated objective for this case is to justify the capacity of the Company to fund the salary for the new Accounts Manager position through more effective use of the Company’s current assets. This objective may or may not prove to be financially feasible. Importantly, however, the decision on employing a person as an Accounts Manager at an annual salary of $58,000 also must consider the effects of the annual salary on the Company’s profitability, as well as whether a firm with modest and declining levels of revenue has any pressing need for the position of Accounts Manager. If these last two questions cannot be answered satisfactorily, the capacity of the Company to fund the additional salary cost through the manipulation to current assets will be irrelevant.

The short-term (current) liquidity position of the Company is summarized in Chart 1. The chart may be found below on this page.


As the data presented in Chart 1 indicate, the improvement in the Company’s current position in 2004 would allow the Company to hire a person for the position of Accoun

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