Corporate Treasury Management

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Questions and Answers

What is the primary responsibility of the treasury department?

Managing the company's investments

Handling payroll processing

Monitoring current and projected cash flows (correct)

Preparing financial statements

What is one of the main tasks of the treasurer?

Allocating annual budgets

Conducting market research

Investing excess funds (correct)

Negotiating employee salaries

Why must the treasurer be prepared for additional borrowings or capital raises?

To ensure compliance with environmental regulations

To mitigate financial risks (correct)

To increase customer satisfaction

To optimize employee benefits

What is one of the key responsibilities of the treasurer in relation to cash flows?

Investing excess funds prudently Signup and view all the answers

Which factor is a key consideration in safeguarding existing assets according to the text?

Excessive losses on interest rates Signup and view all the answers

What does the treasurer need to monitor in order to maintain key relationships with investors and lenders?

Internal processes and decisions causing changes in working capital Signup and view all the answers

What is one of the key issues explored in this chapter regarding the treasury department?

Performance metrics Signup and view all the answers

Why must the treasurer be prepared for additional borrowings or capital raises according to the text?

To meet special funding needs Signup and view all the answers

What is the primary goal for the proper investment of excess funds?

To not put funds at risk and to match the maturity dates of investments with a company’s projected cash needs. Signup and view all the answers

How can the treasury staff mitigate a company’s risk related to interest rates and foreign exchange positions?

By creating risk management strategies and implementing hedging tactics. Signup and view all the answers

What role does the treasury staff play in responding to credit rating agencies?

The treasury staff responds to information requests from the credit agency’s review team and provides it with additional information over time. Signup and view all the answers

Why is it important for the treasurer to maintain excellent relations with the investment community?

To ensure successful fund raising and to maintain a good reputation in the financial market. Signup and view all the answers

What topics are addressed in Chapter 9 and Chapter 10 of the text?

Foreign Exchange Risk Management and Interest Risk Management. Signup and view all the answers

What is the purpose of cash forecasting for the treasury staff?

To plan investment vehicles that match scheduled cash outflows and to determine when more cash is needed. Signup and view all the answers

How does working capital management relate to cash availability?

It involves changes in current assets and liabilities in response to sales and internal policies, impacting cash availability. Signup and view all the answers

What role does the treasurer play in ensuring sufficient cash availability for operational needs?

The treasurer uses information from cash forecasting and working capital management to ensure cash availability for operational needs. Signup and view all the answers

Why is it important for the treasury staff to plan for hedging operations at the individual currency level?

To mitigate risks associated with currency fluctuations and to plan hedging operations effectively. Signup and view all the answers

How does working capital management impact the treasurer's role?

The treasurer should be aware of working capital levels and advise management on the impact of policy changes on working capital. Signup and view all the answers

Study Notes

Treasury Department Responsibilities

The primary responsibility of the treasury department is to manage a company's financial resources.
The treasurer's main tasks include financial planning, capital raising, and cash flow management.

Cash Flow Management

The treasurer must be prepared for additional borrowings or capital raises to manage cash flows effectively.
Monitoring cash flows is a key responsibility of the treasurer to ensure sufficient cash availability for operational needs.

Risk Management

The treasury staff can mitigate a company's risk related to interest rates and foreign exchange positions through hedging operations.
It is important for the treasury staff to plan for hedging operations at the individual currency level.

Relationships with Investors and Lenders

The treasurer must maintain excellent relations with the investment community to ensure access to capital markets.
The treasurer needs to monitor investor and lender relationships to maintain key relationships.

Investment of Excess Funds

The primary goal for the proper investment of excess funds is to maximize returns while minimizing risk.

Working Capital Management

Working capital management relates to cash availability, and the treasurer plays a crucial role in ensuring sufficient cash availability for operational needs.
Working capital management affects the treasurer's role in managing cash flows and accessing capital markets.

Credit Rating Agencies

The treasury staff plays a role in responding to credit rating agencies to maintain the company's creditworthiness.

Chapter Topics

Chapter 9 and Chapter 10 of the text address topics related to the treasury department's role in financial management.

Cash Forecasting

The purpose of cash forecasting for the treasury staff is to predict and manage cash flows effectively.

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Description

This quiz covers the responsibilities of the treasury department in managing a company’s liquidity, including monitoring cash flows, investing excess funds, and preparing for borrowings or capital raises.