course hero which of the following statements concerning cash management is false?

What is the foundation of good cash management?

prepared rather than monthly budgets. firm's target cash balance. d. Cash management involves costs, and it is important the costs incurred. e. The cash budget is the foundation of good cash management. firm's target cash balance. investment for temporarily idle cash? a. Commercial paper. b. Treasury bills.

Which expense is not explicitly included in a cash budget?

Depreciation expense is not explicitly included, but estimated tax payments. b. Cash budgets do not include financial expenses such as interest and dividend payments. long‑term sources such as bond issues. d. Answers a and b above.

How do cash inflows affect a firm’s profitability?

cash inflows and thus reduce its average cash balance. a firm might otherwise keep. little control over the level of these accounts. actually increase a firm's profitability. sales.

How are the cash balances of most firms determined?

a. The cash balances of most firms consist of transactions, compensating, precautionary, and speculative balances. The total desired cash balance and then summing them together. b. The easier a firm's access to borrowed funds the higher its precautionary rates. c. For some firms, holding highly liquid marketable securities is a substitute

What are the four strategies required for a corporate to efficiently manage cash?from theglobaltreasurer.com

The four basic strategies that are required for a corporate to efficiently manage cash are: Forecasting cash position: Forecasting the short-term and long-term cash position is key for corporates. Having a plan for idle cash at an early stage and the need for safety buffers compensating for forecast errors is crucial.

Why is the order to cash cycle important?from theglobaltreasurer.com

Effective management of order-to-cash (O2C) cycle is required to optimise working capital efficiency. Addressing the automation of order-to-invoice (O2I) and invoice-to-cash (I2C) with account reconciliation and rich analytics unlocks the trapped cash in corporate.

How does cash forecasting help?from theglobaltreasurer.com

A reliable understanding of future cash balances reduces idle cash. Furthermore, accurate cash forecasting also improves the standing of the company and can have a positive impact on the company valuation. Understanding the enterprise cash flow gives the following benefits: 1 Increased visibility over cash and payments leading to better liquidity management. 2 Better foreign exchange (FX) management. 3 Structural efficiency to process all intercompany transactions. 4 Payment process improvements.

Why is visibility important in cash management?from theglobaltreasurer.com

Visibility on cash balances across the enterprise is crucial for better liquidity management. The near real visibility of the cash flow across an enterprise helps the cash group head from optimising the return on available liquidity and decreases the unnecessary utilisation of credit lines. Also, detailed knowledge of local bank accounts to the cash head helps central division to advise local management on their decisions about cash, paying local vendors, leaving it on the account or depositing cash with treasury.

Why is it important to identify the weakness in the DSO?from theglobaltreasurer.com

With the changing receivables landscape, cash gets trapped at many places, thus affect ing the overall financial performance of the corporate. Iit is therefore very important for corporates to identify the weakness on the DSO and to take proactive approach for the management of receivables. Few other operational challenges faced today are the decentralised process with no single point of trapped cash, disjointed systems and disintegration of the information management infrastructure.

How to reduce idle cash?from theglobaltreasurer.com

Maintaining less idle cash: Visibility in terms of cash balances becomes a key driver to reduce idle cash. Leaving cash in a local account reduces return and does not make the cash actively available to the group, curtailing optimal utilisation of available liquidity, thereby increasing the utilisation of credit lines.

Why is consolidation of cash important?from theglobaltreasurer.com

Concentration of collected funds: Consolidation of cash helps a company to have better cash control and cash position visibility. The effect is that surplus liquidity is bundled and required capital is internally financed to the maximum extent possible. This, therefore, reduces the corporates’ external interest expense.