CFM CFM Treasury & Cash Management

Question 1

What is the primary objective of corporate treasury management?

Accepted Answer

Ensuring the company has sufficient liquidity to meet obligations while optimizing cash use

Answer

Maximizing gross profit margins

Answer

Minimizing the number of bank accounts

Answer

Increasing accounts receivable balances

Question 2

Which technique concentrates cash from multiple subsidiary accounts into a single master account?

Accepted Answer

Zero-balance account (ZBA) or cash pooling

Answer

Lockbox processing

Answer

Factoring

Answer

Reverse factoring

Question 3

A company's cash conversion cycle (CCC) equals:

Accepted Answer

DSO + DIO - DPO

Answer

DSO + DIO + DPO

Answer

DIO - DSO + DPO

Answer

DPO - DIO - DSO

Question 4

Which short-term investment instrument is typically issued by the US government and matures in one year or less?

Accepted Answer

Treasury Bills (T-Bills)

Answer

Treasury Bonds

Answer

Treasury Notes

Answer

TIPS

Question 5

What is a lockbox system used for in cash management?

Accepted Answer

Accelerating collection of customer payments by routing receipts to a bank P.O. box

Answer

Storing physical currency securely

Answer

Delaying outgoing payments to suppliers

Answer

Encrypting electronic fund transfers

Question 6

What does 'float' refer to in the context of cash management?

Accepted Answer

The difference between the book balance and bank balance due to timing of transactions

Answer

The company's cash balance in savings accounts

Answer

Interest earned on short-term investments

Answer

The number of days until accounts receivable are due