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Introduction to 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

Exercises
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TMI Academy

How To

Introduction to Liquidity Management

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Written by:

expert

Helen Sanders

Treasury Management International

Editor

How to Guides

Introductory digital guides designed to give treasury professionals the skills and understanding of how key elements of treasury fit together. These digital guides have been written by experienced treasury professionals who break down complex topics using practical examples and clear language.
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Author:

 

Helen Sanders: 

Former Director of Education for the Association of Corporate Treasurers. Helen also worked for SunGard and treasury departments in the energy and IT sectors. She is now Editor of Treasury Management International (TMI).

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