CFO Treasury Management & Cash Flow

Question 1

What is the primary objective of treasury management for a CFO?

Accepted Answer

Ensuring liquidity, managing financial risk, and optimizing cash utilization

Answer

Maximizing long-term capital investment returns

Answer

Increasing the company's credit rating above competitors

Answer

Minimizing the total tax liability across all jurisdictions

Question 2

Which metric measures a company's ability to meet short-term obligations using only cash and cash equivalents?

Accepted Answer

Cash ratio

Answer

Current ratio

Answer

Quick ratio

Answer

Debt-to-equity ratio

Question 3

The Cash Conversion Cycle (CCC) measures which of the following?

Accepted Answer

The number of days between paying for inventory and collecting cash from customers

Answer

The time it takes to convert fixed assets into revenue

Answer

The average collection period for accounts receivable only

Answer

The time required to complete an annual audit cycle

Question 4

Which short-term instrument is most commonly used by CFOs to invest excess cash while maintaining liquidity?

Accepted Answer

Money market funds

Answer

10-year Treasury bonds

Answer

Common equity shares

Answer

Real estate investment trusts

Question 5

What does liquidity risk represent in the context of treasury management?

Accepted Answer

The risk that a company cannot meet its financial obligations as they come due

Answer

The risk that interest rates will rise unexpectedly

Answer

The risk of currency fluctuations reducing asset values

Answer

The risk that counterparties will default on derivative contracts

Question 6

Cash pooling allows multinational corporations to:

Accepted Answer

Consolidate cash balances from multiple entities to minimize idle cash and reduce borrowing costs

Answer

Invest subsidiary cash in long-term equity markets

Answer

Eliminate the need for intercompany transfer pricing

Answer

Automatically hedge all foreign currency exposures

Question 7

A rolling 13-week cash flow forecast is primarily used by a CFO to:

Accepted Answer

Anticipate short-term cash surpluses and deficits to manage liquidity proactively

Answer

Determine the annual capital budget allocation

Answer

Calculate the weighted average cost of capital

Answer

Prepare the statutory income tax return