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Treasury Management

Encompasses the strategies and practices involved in managing an organization's financial assets, cash flow, and risks to optimize liquidity and minimize costs.

cash

liquidity

risk

investment

debt

funding

cash flow

working capital

treasury operations

financial instruments

cash management

banking relationships

interest rates

foreign exchange

capital markets

Presenting and explaining your own organization’s credit standing to external parties will influence their willingness to do business with you and the terms they will demand.

  • True
  • False

It refers to any use of resources for future benefit.

  • INVESTING

Inventories are not part of working capital.

  • True
  • False

The key role of the treasury function is to advise the board and management on business decisions and technical operations considerations that are fundamental to corporate strategy.

  • True
  • False

The economic value perfective identifies risk arising from short-term interest rate gaps.

  • False

Those who trade assets on the stock market cannot just buy or sell any asset at any time.

  • TRUE

Invoicing a customer for products or services you sold creates revenue.

  • TRUE

Working capital management also boost company’s earnings.

  • TRUE

More companies today are now requiring cash surplus than in the past.

  • True
  • False

Managing receivables to optimize the investment in working capital.

  • True
  • False

__is the process of costing a balance sheet and then setting requisite prices for asset creators.

  • Funds-transfer pricing

Treasury reports should be in accordance with IFRS.

  • True
  • False

IFRS stands for __.

  • International Financial Reporting Standards

A company can sell goods before they have to pay the bill to the vendor is __.

  • VENDOR FINANCING

Inter-company payments can often be another source of lost liquidity.

  • True
  • False

__refers to money put up and owned by the owners.

  • EQUITY CAPITAL

Software development facilitates treasury function.

  • True
  • False

An organization with little cash can remain liquid as long as it has the ability to borrow.

  • True
  • False

Successful management depends on having an insight into the business’s future cash generation.

  • True
  • False

Profit from past years that have been kept by the company is known as __.

  • retained earnings

Use Income statement to check liquidity.

  • True
  • False

Working capital management is less significant to operation cycle of the business.

  • TRUE

Manufacturers take advantage of long-term debt by issuing __.

  • PREFERENCE SHARES

If your business is expanding, business loan is not recommended.

  • FALSE

Consolidating bank accounts balances from a number of accounts into one account to offset interest income against expense

  • True
  • False

__is the amount and type of risk an organization is willing to accept in pursuit of its business objectives.

  • RISK TOLERANCE

Forwards and future contracts help investor hedge interest rate risks.

  • TRUE

Business can use accounting programs to make cash flow analysis easy.

  • TRUE

__ of the government will also affect the capital structure decisions.

  • Monetary and fiscal policies

A business should generate enough __to finance its future growth.

  • REVENUE

Identify the factor on which an organization’s financial strategy assesses the optimal financing solution as how to measure and monitor leverage.

  • markets
  • leverage
  • ranking of capital

Business strategy and financial strategy together form a __ strategy.

  • CORPORATE

__is the safest type of debt capital because the company has years to come up with the principal.

  • LONG-TERM BONDS

Identify the factor on which an organization’s financial strategy assesses the optimal financing solution as the ease and cost of financing.

  • leverage
  • ranking of capital
  • markets

Capital financing is balancing act between debt and equity.

  • TRUE

Externally raised capital may be debt or __.

  • EQUITY

Shareholders are determined to maximize long-term free cash flow.

  • TRUE

Assets and Liabilities sit on a Balance Sheet.

  • True
  • False

Capital structure includes short-term liabilities

  • True
  • False

__also called Zero balancing.

  • CASH CONCENTRATION

Funding strategies include asset-based financing, leasing and working-capital financing.

  • True
  • False

One type of liquidity refers to the ability to trade an asset.

  • TRUE

In debt ratio, more liabilities mean less equity and therefore indicate a more __position.

  • LEVERAGED

Equity consists of a company’s Common and __ stock plus Retained earnings.

  • preferred

__risk focuses on longer-term and ensure that the business can continue business plans in the future.

  • STRATEGIC LIQUIDITY

Optimizing bank charges and float can save considerable amounts of money.

  • True
  • False

Responsibilities of hedging company-wide interest rate and FX risk sits with the __.

  • the treasury function

Profit is equal to cash flow.

  • FALSE

__are essential tool for identifying trends and overall cash generation over time.

  • LONG-TERM FORECASTS

Working capital is the difference between the current assets and current liabilities.

  • TRUE

At the strategic level, treasury is about advising on the appropriate choices, trade-offs and compromises involved when financial decisions are taken.

  • True
  • False

__are loans from the capital market to meet day-to-day working capital requirements.

  • Short-term commercial paper

Companies in developing markets focus too closely on accounting-type measures.

  • True
  • False

Most companies have had a treasury department.

  • True
  • False

FX spot trades cannot be used to long-term interest rate swaps.

  • True
  • False

__ratio provides insight into how risky a company’s borrowing practices.

  • Debt-to-equity

__risk focuses on short-term needs arising from day- to- day operations.

  • OPERATIONAL LIQUIDITY

Assets structure=Fixed Assets +Current Assets

  • True
  • False

Interest rates affect equity investors and less directly than bond investors.

  • TRUE

Cash is King, because NO cash, NO business.

  • TRUE
  • Your answer: is correct.

Inventory is a current asset

  • TRUE

__ arises when an organization has to commit to a price before actually entering into transactions.

  • Pre-transaction risk

Investing covers which of the following?

  • Acquiring property, plant and equipment
  • Intangible assets
  • Marketing programs
  • Staff training
  • Research and development

Land and buildings or expensive equipment are good security for a provider of acquisition funds.

  • True
  • False

Diversification is not an answers to interest rate risk.

  • FALSE

Liquidity enables an organization to pay its obligations where and when they fall due.

  • True
  • False

Digital payments have risen sharply because of corona virus.

  • TRUE

Cash flow problems can be one of the leading causes of failure for business.

  • TRUE

Banks should measure their vulnerability to loss under stressful market conditions.

  • TRUE

Current assets include anything that can be easily converted into cash within 24 months.

  • FALSE

It is good to manage cash flow using the bank balance.

  • FALSE

__ crystallize the asset positions into GBP to retain parity.

  • [No Answer]

Risk of __ arises due to failure to pay fixed interest liabilities.

  • CASH INSOLVENCY

The use of fixed interest bearing securities along with owner’s equity as sources of finance is known as __.

  • trading on equity

__is the money that was originally invested in the business in exchange for shares of stock or ownership.

  • CONTRIBUTED CAPITAL

Total debt to total assets is known as __ratio.

  • debt-assets

If the economy is slow, the central bank may reduce the interest rate to stimulate activity.

  • True
  • False

__model provides insight into how company will earn on the money its owners have invested.

  • [No Answer]

Shortened the cash flow conversion period is not a good idea.

  • FALSE

Cash flow means cash receipts.

  • True
  • False

Treasurers are financial asset managers in their company.

  • True
  • False

Corporate finance is concerned with maximizing shareholder value through short-term financial planning.

  • FALSE

Business will not lose money when they don’t hedge exposures for currencies.

  • True
  • False

Borrowing facilities are included in cash-flow forecasts.

  • True
  • False

Long-term assets are different from non-current assets.

  • FALSE

For short-term cash flow shortages, many business owners make use of credit cards or lines of credit.

  • TRUE

A sudden change in currency would distort the risk.

  • True
  • False

The government gives financial support for businesses struggling from the impact of corona virus.

  • TRUE

Medium term forecasts often extend to a rolling year.

  • True
  • False

Every organization deals with treasury issues, but many organizations have the same treasury functions.

  • True
  • False

Interest rate risk arises when the absolute level of interest rates fluctuate.

  • TRUE

Identify the primary sources of capital funding.

  • revenues
  • equity
  • loans
  • cash reserves

Good cash forecast accurately predicts the cash inflows but never the outflows.

  • FALSE

There are more than ten ratios involved in tracking down efficient working management.

  • FALSE

Risk is the primary source of the firm’s growth.

  • True
  • False

Banks are seldom evaluated on their liquidity.

  • FALSE

Moody’s Standard & Poor’s is a __agency.

  • CREDIT RATING

Strong balance sheets should reflect lower levels of debt and higher levels of __.

  • equity

Acid test ratio is a strong indicator whether a firm has sufficient short-term assets to cover its immediate liabilities.

  • TRUE

The element of receivables management comes under the umbrella of cash forecasting.

  • TRUE

Identify the factor on which an organization’s financial strategy assesses the optimal financing solution as the diversity of sources and the maturity of financing.

  • markets
  • leverage
  • ranking of capital

Earning perspective involves the impact of changes in interest rates on accrual.

  • TRUE

Working capital management requires monitoring of the company’s assets and liabilities.

  • TRUE

Organizations with more stable cash flows and longer-term assets will be more comfortable servicing debt and so are unlikely to borrow for proportionately longer periods.

  • True
  • False

Capital expenditure is an operational item.

  • True
  • False

Risk can present opportunities or threat to business objectives.

  • True
  • False

Interest rates and bond prices are inversely related.

  • TRUE

Cross-currency transactions can be unpredictable.

  • TRUE
  • Your answer: is correct.

Banks are not required to hold capital commensurate with the level of interest rate risk.

  • False
  • Answer 18

Firms with a variety of operations across the globe may encounter data consolidation issues when attempting to analyze liquidity risk at the group level.

  • TRUE

__ system covers the providers of funds against risks.

  • RISK MANAGEMENT

In the company’s treasury department funds move in real time.

  • True
  • False

Effective treasury requires a thorough understanding of the organization’s business model and its industry.

  • True
  • False

A __ of a company helps to increase the market price of shares and securities.

  • SOUND CAPITAL STRUCTURE

Equity financing involves raising money from venture capitalists.

  • TRUE

__is the particular combination of debt and equity used by a company to finance its overall operations and growth.

  • Capital structure
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