TREASURY MANAGEMENT Treasury Department as to its distribution

LECTURE 01 6/14/17 funding operations

o cash and liquidity management
Treasury Management involves the managing of CASH and o short-term financing
INVESTMENT of businesses o cash forecasting
treasury operations
Functions of Treasury Management o financial management
Forecasting and cash flow analysis o portfolio management
Short and long-term borrowing and investing
Foreign exchange The following shall be established:
Risk management
AIMS whether it should be a profit or cost to
o Risk retention

URYTREAS
transfer
o Risk transfer
POLICIES the level of liquidity desired
o Risk avoidance AUTHORIZATION the degree of centralization
o Risk hedging activities LEVEL
Financial Risks RISK POSITION the extent to which the company
o Credit risk & STRUCTURE should be exposed to financial risk
o Liquidity risk
o Market risk FOUR PILLARS OF TREASURY MANAGEMENT
Foreign exchange risk
Interest rate risk 1. FUNDING
Commodity price risk a. Why do firms internally generate funds?
b. How much should companies borrow?
Treasury Management System i. Borrow too much, and the business go bust,
manage and track treasury related operations borrow too little and you could be losing out
manage corporate loans and financial instruments on cheap finance
project future cash flow along with foreign exchange deals c. What form of debt?
(have better control of your cash flow through accurate i. Level of borrowing
predictions) ii. Form of debt
1. Loans, leasing
Treasury Management the efficient management of liquidity 2. Maturity (short-term/long-term)
and financial risks of business 3. Interest rate (volatile/fixed)
4. Currency mix (what currencies should
Treasury Functions vary as to its size, structure and the loan be in?)
responsibilities among organizations out of the following iii. Debt portfolio management
factors: d. How do you finance asset growth?
1. corporate size i. Planned investment to be financed by short-
2. listing status term and long-term
3. degree of international business ii. Currents assets classification
4. attitude to risk
1. Fluctuating