Chapter 1: Treasury Management Comprehensive Actual Exam Questions With Correct Detailed Answers.

Treasury management - correct answer effective and efficient use of a company's financial assets and involves daily liquidity for sustainable operations Primary goal of TM - correct answer effectively and efficiently manage organization's cash for financial flexibility to achieve objectives. All firms have finite amount of asses and variable amount of liquid assets. Major Objectives - correct answer 1. Maintain liquidity 2. Optimize cash resources 3. Maintain Access to ST financing 4. Manage investments 5. Manage access to medium and LT financing 6. Manage risk 7. Manage information and technology 8. Collaborate with other depts and share financial information 9. Manage external parties Maintain Liquidity - correct answer ability to meet current and future financial obligations in a timely and costly manner Optimize Cash Resources - correct answer establish policies and procedures and implement strategies to manage low yielding cash balances while providing adequate liquidity and investing cash balances to generate interest income or pay down debt to reduce the interest expense Maintain access to ST financing - correct answer establish and maintain short term credit facilities while minimizing borrowing costs which are commonly use to in finance investments in operating working capital such as AR and INV and to provide temp financing on cap investments. Manage investments - correct answer investing excess funds in a prudent manner for both ST and LT, preservation of principal and ensuring liquidity and maximizing return. Manage access to mediums and LT financing - correct answer supports planned assets expansion and the exiting asset base with financial flexibility for strategic investments. Manage risks - correct answer identify, measure, analyze and mitigate expose to organization a. financial risks (IR, foreign exchange, commodity) b. regulatory risks( compliance) c. operational risks (supplier and fraud) Financial risks - correct answer interest rates foreign exchange commodity Regulatory risks - correct answer compliance Operational risks - correct answer supplier and fraud Liquidity - correct answer asset or firm Asset liquidity - correct answer quickly convert asset to cash with out too much loss of value, one that is easily bought and sold. cash is the most liquid asset Firm liquidity - correct answer ability to meet financial obligations in a timely basis and take advantage of investments as they arise. Manage information technology - correct answer select, implement, manage tech solutions to gather and analyze financial info and can improve cash visibility, straight through processing and increase operation efficiency Collaborate with other dpts and share financial information - correct answer coordinate function and communicate to ensure cash is efficiently utilized Manage external parties - correct answer relations with external stakeholders such as banks/ financial institutions, customers and suppliers while minimizing risk expense. key aspect of cash management - correct answer managing a firms operational cash flow cash conversion cycle - correct answer ase of resources-- nt for resources-- of good for services-- ction of sales receipts days inventory: between 1-3 days receivable: between 3-4 days payable: between 1-2 cash converstion cycle 2-4 another term for treasury operations - correct answer cash management Daily treasury operations include - correct answer 1. Calculating the cash position 2. Monitoring cash balances 3. Collecting, concentrating and disbursing cash 4. Investing and borrowing funds on a ST basis 5. Developing CF forecasts 6. Researching and reconciling exception items 7. Coordinating efforts with other finance areas AR AP tax etc 8. Managing bank and investment admin and relations External vendor relations - correct answer banks- most have several Internal Collaborations - correct answer procurement, HR, legal, act/reporting, IT, risk management, audit , 401k, FPA, AP, AR External Collabortations - correct answer financial markets, financial institutions, 3rd part providers, rating agencies, external investment managers, external audit, suppliers/customers, industry trade gorups, external legal counsel Treasury is a component of - correct answer the financial management function What components are in the financial management function/ - correct answer accounting, tax, investor relations, FPA What is financial management function responsible for? - correct answer Financial reporting, tax management, budgeting, analysis of capital struct