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 primary function of treasury management ensures a company can meet its short-term obligations?
Answer: Liquidity management
Liquidity management ensures sufficient cash is available to meet short-term obligations without holding excess idle funds.
A company's 13-week cash flow forecast is BEST used for which purpose?
Answer: Short-term liquidity planning
A 13-week rolling cash flow forecast is the standard tool for short-term liquidity planning and identifying near-term cash gaps.
Which instrument is MOST commonly used by treasury departments to invest short-term excess cash?
Answer: Money market instruments
Money market instruments such as T-bills and commercial paper are preferred for excess cash due to their high liquidity and low risk.
The difference between a company's cash inflows and outflows in a given period is called:
Answer: Net cash flow
Net cash flow is the difference between total cash inflows and total cash outflows during a specific period.
A centralized treasury structure offers which primary advantage over a decentralized one?
Answer: Netting of intercompany cash flows
Centralization allows netting of intercompany cash flows, reducing external borrowing costs and foreign exchange transaction volumes.
Which metric measures how quickly a company converts its investments in inventory and accounts receivable into cash?
Answer: Cash conversion cycle
The cash conversion cycle (CCC) measures the time between investing cash in operations and collecting cash from customers.