CCM Cash Management Fundamentals 2

Question 1

Which disbursement method allows a company to maximize float by issuing checks drawn on a distant bank?

Accepted Answer

Remote disbursement

Answer

Remote disbursement intentionally uses a geographically distant bank to extend mail and clearing float, delaying the actual cash outflow.

Question 2

A company's cash conversion cycle (CCC) is calculated as:

Accepted Answer

DSO + DIO - DPO

Answer

CCC = Days Sales Outstanding + Days Inventory Outstanding − Days Payable Outstanding, measuring the time cash is tied up in operations.

Question 3

What is the primary purpose of a lockbox network in cash management?

Accepted Answer

To accelerate collection of receivables

Answer

A lockbox network routes customer payments to post office boxes near regional banks, reducing mail float and speeding up deposit availability.

Question 4

Under the Federal Reserve's Regulation CC, what is the maximum hold period a bank may place on a local check for a new account?

Accepted Answer

9 business days

Answer

Regulation CC allows banks to impose a 9 business-day hold on checks deposited into new accounts (open less than 30 days).

Question 5

A sweep account automatically transfers excess balances into which type of instrument at the end of each business day?

Accepted Answer

Overnight money market funds or repo agreements

Answer

Sweep accounts move idle balances into overnight vehicles such as money market funds or repurchase agreements to earn a return without sacrificing liquidity.

(CCM) Certified Cash Manager Practice Test

(CCM) Certified Cash Manager Practice Test

CCM Cash Management Fundamentals 2