20

Question 1

treasury function manages the money and financial risks of an organisation

Answer 1

• Ensuring org has enough cash to meet operating requirements + financing obligations
• Identifies and executes opportunities to invest excess cash
• Identifies and manages risks involved in the cash flow and funding of the organisation
• forecasting cash flow positions, related borrowing needs and funds available for investment.
• Manages banking requirements
• Advises on long-term strategic funding requirements and investments
• Manages pension obligations and insurance requirements
• Manages foreign exchange exposure and risks, such as ensuring sufficient foreign exchange for import/export requirements and minimising the negative impact of forex movements

Question 2

cash management

Answer 2

ensures the organisation always has enough cash to meet expenses, seeks funding for deficits, and invests surplus

Question 3

economic trend is

Answer 3

general long-term direction in which the economy moves
represents fluctuations in activity that the economy experiences over time

Question 4

Fluctuations

Answer 4

parts of business cycle: often described as boom and bust, recovery and recession

Question 5

economy’s performance is measured as the growth % of gross domestic product (GDP)

Answer 5

net output of an economy
total monetary value of all goods and services produced by the examined economy
usually net of exports and imports

Question 6

Organisations are more willing to take risks during a boom

Answer 6

operate with lower cash balances, expecting easy access to funds if necessary
may expand their production volumes to capitalise on the higher product demand

Question 7

Management During Economic Downtrend

Answer 7

• Re-examine the value they provide to customers, especially if they are unwilling or unable to pay current prices
• Examine discretionary expenses and rebalance the workforce.
• Ensure lines of credit are available and maintain strong relationships with providers of funds (banks and shareholders)
• Invest in areas that will create sustainable advantage and ensure company growth when the economy improves.

Question 8

Some of the economic issues that entities may need to consider are:

Answer 8

Inflation rates
Interest rates
Foreign exchange rates
Industry consumption trends

Question 9

private sector refers to

Answer 9

entities privately owned by individuals and organisations that invest capital to maximise owner wealth

Question 10

public sector refers to

Answer 10

entities created by the constitution and laws of a country to govern its citizens. Its investments aim to provide public goods and services to its constituents

Question 11

risk that public sectors need to reduce

Answer 11

not only in investment appraisal but also in the retention of cash and cash equivalents

Question 12

cash handling procedures

Answer 12

• Receive cash in the post
• Date-stamp post and keep in a secure room
• Ensure two responsible people open the post
• Record cash receipts immediately
• Ensure segregation of duties
• Ensure prompt banking
• Reconcile cash book to banking records
• Investigate any differences between cash and banking records
• Arrange random checks
• Ensure documentation of each step

Question 13

Electronic cash payments and receipts usually involve a current account and some means of transfer (such as direct debit or credit or EFTPOS).

Answer 13

• control
• payments
• ## receipts