Login
Register
- Mocks
- Previous Papers
- Learn
- Practice
- Colleges
- Courses
- Enroll To CAT 2024
- Offers
- Other Exams
- Blogs
- Adda
Read the following scenario and answer the THREE questions that follow.
Comprehension:
Future Leaders is one of the most prestigious private schools in a small town, next to an industrial hub. Most of its students come from affluent families, but there are some who belong to middle-income and lower-middle-income families as well. The school charges an annual fee of ₹2 lakhs, inclusive of all charges, payable at the beginning of the academic year. Roughly 20% of the fees collected goes into paying the salaries of the teachers, another 30% for the upkeep of the school, and roughly 20% for miscellaneous expenses in running day-to-day businesses like supply, cleaning etc. The remaining goes into an exigency corpus.
This year, like the rest of the country, the town has been hit by the coronavirus pandemic. The classes have been shifted online. The local authorities have mandated that all schools have to reduce their fees by 20%. Further, parents should be given extended time to pay the fees if they are in financial distress. Six months into the academic year, only 40% of the parents have paid even the reduced annual fees.
The board of trustees of the school is concerned about the current financial situation and has called Biswas for a meeting. The trustees have thought of the following actions, as listed below, to improve the school finances immediately:
P. Appeal to the local industrialists to donate to the school
Q. Withhold 20% of teachers' salary till the situation improves
R. Ask parents to pay up within a week or show a proof of financial distress
S. Stop online classes for a week to signal the desperate financial crunch
T. Start an extra section in every class and offer admission to whoever is willing to pay fees
Biswas is tasked to find the most feasible way of alleviating the financial crunch immediately.
Which of the following combinations of the above-listed actions, in a DECREASING order of preference, will BEST help Biswas in achieving his goal?
As the school is facing an immediate cash crunch, it should cut down on expenses and try to bolster the cash receivable. It should take all steps that are in their hands - asking others for money will take time and would not be entirely in their hands. So the first 2 steps should be Q and R as it would help the immediate situation. Moreover, R alone will not be effective. It needs to couple the threat with S to highlight the seriousness of the situation.
Step P would be helpful, but getting grants during financial crises is unlikely and would take a lot of time. Similarly, filling a new section to get money is unlikely to work when school is online and people are struggling. Hence, P and T should be last in priority as they are unlikely to work.
Create a FREE account and get:
