Mixed Deck — All CCM Topics Flashcards

Which of the following is a common short-term working capital financing strategy?

Answer: Revolving credit facility

A revolving credit facility provides flexible short-term borrowing capacity that can be drawn and repaid repeatedly to fund temporary working capital needs.

A treasury analyst observes that the company's float days have increased from 2.5 to 4 days. What is the most likely impact on working capital?

Answer: Working capital deteriorates because cash is tied up longer before becoming available

Longer float days mean collected funds are unavailable for a greater number of days, effectively tying up working capital and increasing the need for external liquidity.

Dynamic discounting in accounts payable allows buyers to:

Answer: Offer variable discounts to suppliers for early invoice payment

Dynamic discounting lets buyers offer suppliers early payment at a sliding discount rate — the earlier the payment, the greater the discount.

Multi-bank cash pooling allows a corporate treasurer to:

Answer: Consolidate balances across multiple banks to optimize interest income and borrowing costs

Cash pooling consolidates subsidiary balances across banks — either physically via sweeps or notionally via virtual offsets — so the group earns interest on the net position and minimizes borrowing.

A company implements a positive pay system. What risk does this primarily mitigate?

Answer: Check fraud through altered payee names or counterfeit checks

Positive pay matches checks presented for payment against the company's issued check file, flagging any checks with altered amounts, payees, or that are not on the issued list.

SWIFT messaging is primarily used for:

Answer: International bank-to-bank financial messaging

SWIFT (Society for Worldwide Interbank Financial Telecommunication) provides a secure, standardized messaging network for international bank-to-bank payment instructions and financial communications.

Under SWIFT's MT940 message type, what financial information is communicated?

Answer: Customer account statement (end-of-day balance and transaction detail)

MT940 is the SWIFT standard statement message transmitting end-of-day account balances and transaction details from a bank to its corporate customer.

ACH credit transactions initiated by a company to pay employees' salaries are classified under which Standard Entry Class (SEC) code?

Answer: PPD

PPD (Prearranged Payment and Deposit) is the ACH SEC code used for consumer direct deposit of payroll and other recurring credits to personal accounts.

Which banking service helps companies concentrate cash from multiple accounts into one?

Answer: Cash concentration

Cash concentration is a banking service designed to move funds from multiple subsidiary or regional bank accounts into a single master account. This process allows companies to centralize their cash management, improve liquidity, and optimize investment opportunities by having all available cash in one place. It enhances financial control and efficiency.

A company's current ratio is 1.8 and its quick ratio is 0.9. What does this indicate?

Answer: The company relies heavily on inventory to meet short-term obligations

A large gap between the current and quick ratios indicates the company holds significant inventory; without it, liquid assets are insufficient to cover current liabilities.

What is the primary purpose of financial analysis & reporting in the context of Certified Cash Manager?

Answer: To ensure consistent quality and professional accountability

Financial Analysis & Reporting in Certified Cash Manager primarily ensures consistent quality and professional accountability, forming the foundation of competent practice in this field.

A company enters a repurchase agreement where it sells securities and agrees to repurchase them the next day. From the company's perspective, this transaction is:

Answer: A form of short-term borrowing secured by securities

A repo from the seller's perspective is collateralized borrowing; the company raises cash and pledges securities as collateral.

The principle of 'segregation of duties' in compliance and internal control primarily aims to:

Answer: Reduce errors and fraud by requiring multiple individuals to complete sensitive processes

Segregation of duties ensures no single individual controls all steps of a critical process, reducing the opportunity for errors or fraud.

Under US export control regulations (EAR/ITAR), 'deemed exports' refer to:

Answer: Technology disclosed to foreign nationals within the United States

A deemed export occurs when controlled technology or software is released to a foreign national in the US, which is treated as an export to their home country.

In a notional pooling arrangement, which statement is most accurate?

Answer: Balances in separate accounts are combined mathematically for interest purposes without moving cash

Notional pooling aggregates account balances on paper to calculate a net interest position, while each entity's cash remains in its own account without physical movement.

A compliance program's effectiveness is BEST measured by:

Answer: Reduction in compliance incidents, audit findings, and employee awareness scores

Effective compliance programs are measured by outcomes — fewer violations, lower audit findings, and higher employee understanding — not inputs.

A company evaluating a banker's acceptance (BA) as a short-term investment should be aware that its yield is quoted on a:

Answer: Discount basis (360-day year)

Banker's acceptances, like Treasury bills and commercial paper, are quoted on a bank discount basis using a 360-day year, so their true yields are slightly higher than quoted.

What is the primary purpose of tax planning & strategy in the context of Certified Cash Manager?

Answer: To ensure consistent quality and professional accountability

Tax Planning & Strategy in Certified Cash Manager primarily ensures consistent quality and professional accountability, forming the foundation of competent practice in this field.

A non-disclosure agreement (NDA) is primarily used to manage which type of commercial risk?

Answer: Confidentiality and intellectual property risk

NDAs contractually protect proprietary information and trade secrets, directly managing the risk of unauthorized disclosure of confidential information.

Which measure best captures the total return on a money market instrument, accounting for compounding when reinvested?

Answer: Effective annual yield

The effective annual yield (EAY) compounds the periodic return to reflect true annualized earnings including reinvestment.