Cash/Liquid Management

What is the primary goal of cash management?

• Maximizing profits

• Minimizing expenses

• Minimizing cash balances

• Optimizing liquidity

Which of the following is a key component of cash flow management?

• Investing in long-term assets

• Forecasting cash inflows and outflows

• Delaying payments to suppliers

• Increasing inventory levels

What is the difference between cash and cash equivalents?

• Cash is physical currency, while cash equivalents are short-term investments.

• Cash equivalents are physical currency, while cash refers to funds in a bank account.

• There is no difference.

• Cash and cash equivalents are both long-term investments.

How can a company improve its cash conversion cycle?

• Increasing inventory turnover

• Extending payment terms with suppliers

• Decreasing accounts receivable collection period

• All of the above

What is the purpose of a cash budget?

• To track actual cash flows

• To forecast future cash inflows and outflows

• To record all financial transactions

• To calculate net income

Which of the following strategies can help a company manage excess cash?

• Investing in long-term assets

• Holding excess cash in a non-interest-bearing account

• Distributing dividends to shareholders

• Investing in short-term marketable securities

What is the role of a treasurer in cash management?

• Managing accounts payable

• Forecasting cash flows

• Managing inventory levels

• All of the above

How does cash management differ for multinational corporations compared to domestic companies?

• Multinational corporations have higher cash reserves

• Multinational corporations face additional currency exchange risk

• Domestic companies have more investment opportunities

• There is no difference