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Accounting & Finance Interview Questions

Terms in this set (99)

Treasury Role-1. Cash Forecasting

Generate a cash forecast (short and long-range) to determine if more cash is needed. If short than plan for debt or equity issuance. If surplus cash than plan for investment.

Treasury Role-2. Working Capital Management

To track and understand W/C. W/C is a key component of cash forecasting. It involves changes in the levels of current assets and current liabilities in response to a company's general level of sales.

Treasury Role-3. Cash Management

Combining information in the cash forecast and working capital management activities, Treasury staff is able to ensure that sufficient cash is available for operational needs.

Treasury Role-4. Investment Management

When the forecast shows some excess funds at, the treasury staffs are responsible for the proper investment of it. Three primary goals of the role are: (a) maximum return on investment; (b) matching the maturity dates of investments with a company's projected cash needs; and most importantly is (c) not putting funds at risk.



Treasury Role-5.Treasury Risk Management

The treasury staffs are also responsible to create risk management strategies and implement hedging tactics to mitigate the whole company's risk—particularly in anticipating (a) market's interest rates may rise and leave the company pays on its debt obligations; and (b) company's foreign exchange positions that could also be at risk if exchange rates suddenly worsen.

Note: A hedge is an investment position intended to offset potential losses or gains that may be incurred by a companion investment

Treasury Role-6. Credit Rating Agency Relations

A company may issue marketable debt. In this case a credit rating agency will review the company's financial condition and assign a credit rating to the debt. The treasury staff would need to show quick responds to information requests from the credit agency's review team.



Treasury Role-7. Bank Relation

A long-term relationship can lead to some degree of bank cooperation if a company is having financial difficulties, and may sometimes lead to modest reductions in bank fees. The treasurers should therefore, often meets with the representatives of any bank that the company uses to: discuss the company's financial condition, the bank ' s fee structure, any debt granted to the company by the bank, and foreign exchange transactions, hedges, wire transfers, cash pooling, and so on.



Treasury Role-8. Fund Raising

Maintaining an excellent relations with the investment community for fund raising purposes, is important—from the (a) brokers and investment bankers who sell the company's debt and equity offerings; to the (b) the investors, pension funds, and other sources of cash, who buy the company's debt and equity.

Monitor interest rates that the company is likely to pay on new debt offerings, the availability of debt, and probable terms that equity investors will want in exchange for their investment in the company.