Chapter 1- Role Of Treasury Management

Question 1

Major objectives of treasury management

Answer 1

• maintain liquidity
• optimize cash resources
• maintain access to short term financing
• manage investments
• maintain access to medium and long term financing
• manage risk
• manage information and technology
• collaborate with other departments and share financial information
• manage external parties

Question 2

Treasury operational structures

Answer 2

1) cost center vs profit center
2) centralized vs decentralized
3) shared services centers

Question 3

Shared services center (SSC)

Answer 3

A department or operation within a multi unit organization that supplies multiple business units with specialized services

Typically used to:

• reduce the costs of multiple or duplicate operations
• standardize processes
• improve the quality and timeliness of services
• increase strategic flexibility
• strengthen internal controls

Question 4

Agency problem

Answer 4

Where managers are the legal agents acting on behalf of ownership and thus have different incentives and priorities that might be in conflict

Question 5

Cooling off period for independent directors

Answer 5

A director can only be considered independent if she has not been an employee or independent auditor of the company for a continuous five year period