Liquidity Management

While the treasurer's role comprises of a number of different elements, he or she has an overriding objective, often described as treasury's 'primary duty'. Essentially, a company needs to be able to meet its financial obligations as they fall due.

This can also be described as the need to maintain liquidity, or solvency of the company: a company needs to have the funds available that will enable it to stay in business. This module introduces some of the ways in which companies achieve this, specifically looking at financing, mobilisation of cash and cash investment.

Key Topics:

1. Introduction

The timing mismatch

2. Financing Time Horizons

Short-term - Medium-term - Long-term

3. Short-Term Financing Methods

Bank overdraft - Credit facilities

4. Cost of Short-Term Borrowings

Bank account interest - Simple interest on loans

5. Investment Choices

Deposit - Money market funds (MMFs) - Commercial paper - Certificate of deposit - Treasury bills - Repurchase Agreements

6. Cash Investment

Working capital - Core cash - Long-term cash - Outsourcing investment - Calculating returns on cash investment

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Liquidity Management


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