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?

<p>Investing excess funds prudently (C)</p> Signup and view all the answers

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

<p>Excessive losses on interest rates (A)</p> Signup and view all the answers

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

<p>Internal processes and decisions causing changes in working capital (B)</p> Signup and view all the answers

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

<p>Performance metrics (D)</p> Signup and view all the answers

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

<p>To meet special funding needs (B)</p> Signup and view all the answers

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

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

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

<p>By creating risk management strategies and implementing hedging tactics.</p> Signup and view all the answers

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

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

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

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

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

<p>Foreign Exchange Risk Management and Interest Risk Management.</p> Signup and view all the answers

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

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

How does working capital management relate to cash availability?

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

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

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

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

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

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

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

Flashcards

Treasury Department's Primary Responsibility

Monitoring current and projected cash flows.

Treasurer's Main Task

Investing excess funds prudently.

Treasurer's Preparedness

Preparing for additional borrowings or capital raises to mitigate financial risks.

Cash Flow Investment Goal

Matching investment maturity dates with projected cash needs.

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Safeguarding Existing Assets

Considering risk from interest rate changes.

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Maintaining Investor/Lender Relations

Monitoring internal processes and decisions affecting working capital.

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Treasury Department Performance

Measured using key performance metrics.

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Treasury for Funding Needs

Preparing for additional funding when needed.

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Cash Forecasting Purpose

Planning investments to match cash outflows and determine funding needs.

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Working Capital & Cash Availability

Changes in current assets and liabilities affect cash.

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Treasurer's Role in Cash Availability

Using cash forecasting and working capital information to ensure adequate cash for operations.

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Hedging Operations & Currency Risk

Mitigating currency fluctuations and planning for effective hedging.

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Working Capital Impact on Treasurer

Treasurers need to understand and advise on policy changes' impact on working capital.

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Treasurer and Credit Ratings

Responds to credit review team information requests and provides relevant data for evaluation.

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Treasurer & Investment Community

Maintaining positive relationships to ensure successful fund raising and market reputation.

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Chapter 9 & 10 Topics

Foreign Exchange and Interest Risk Management.

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Interest Rate Risk Management

Managing potential losses due to changes in interest rates.

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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.

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