Treasury Management and Cash Flow Forecasting Flashcards
6 cards from real CPFM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Treasury Management and Cash Flow Forecasting flashcards as text
Which of the following BEST describes the purpose of a treasury policy statement?
Answer: To establish guidelines for managing financial risks and cash
A treasury policy statement establishes the framework, guidelines, and limits for managing the company's financial risks, liquidity, and investments.
Electronic funds transfer (EFT) benefits treasury operations primarily by:
Answer: Speeding up and securing cash movements
EFT accelerates cash transfers and improves accuracy and security compared to paper-based payment methods.
A company with significant foreign currency revenues would use natural hedging by:
Answer: Matching foreign currency revenues with expenses in the same currency
Natural hedging matches foreign currency inflows with outflows in the same currency, reducing net exposure without financial instruments.
The primary purpose of a cash pooling structure in a multinational company is to:
Answer: Optimize liquidity by concentrating cash across entities
Cash pooling centralizes excess cash from subsidiaries to maximize group-wide liquidity and minimize external borrowing costs.
Which action would MOST likely reduce a company's days sales outstanding (DSO)?
Answer: Implementing stricter credit policies and faster collections
Stricter credit policies and faster collections reduce the average time to collect receivables, thereby lowering DSO.
In treasury management, interest rate risk on a floating-rate loan is BEST mitigated by:
Answer: Entering an interest rate swap to pay fixed and receive floating
An interest rate swap converts floating-rate payments to fixed-rate payments, protecting the company against rising interest rates.