Question Tag: Treasury Management

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FM – Nov 2021 – L3 – Q4 – Corporate Governance and Financial Strategy

Assess LL's corporate objectives, the finance director's view, and treasury strategies within a low-interest economic environment.

Question

Leye Limited (LL) is a privately-owned toy manufacturer in Nigeria, operating internationally as both a supplier and a customer. While privately owned, LL’s revenue and asset base are comparable to some publicly listed companies. It has numerous shareholders but has no plans for public listing. Major shareholders have expressed an interest in buying out smaller investors.

LL has a strong history of profitability, which satisfies both directors and shareholders. They avoid strategies that increase risk significantly, such as acquisitions or overseas manufacturing setups, accepting a comparatively lower growth rate than competitors.

The company’s capital structure is composed of 70% equity and 30% debt (based on book values), with debt comprising secured and unsecured bonds carrying interest rates between 7% and 8.5%, maturing in 5 to 10 years. In a low-inflation and potentially declining interest rate environment, the company treasurer is exploring refinancing options.

LL’s primary financial objective is annual dividend growth, with a non-financial objective of treating all stakeholders with fairness and equality. The Board is currently reassessing these objectives. While the new Finance Director advocates for shareholder wealth maximization as the sole objective, other directors favor a balanced approach, including goals such as profit after tax, return on investment, and operational performance improvements.

Required:

a. Evaluate the appropriateness of LL’s current objectives and the Finance Director’s suggestion. Discuss the issues the Board should consider in setting new corporate objectives, concluding with a recommendation. (10 Marks)

b. Discuss factors the treasury department should consider when formulating financing or refinancing strategies in the given economic context. Explain how these factors might influence the determination of corporate objectives. (10 Marks)

Answer

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Topic: Corporate Governance and Financial Strategy

PSAF – Nov 2014 – L2 – Q6 – Public Sector Reforms

Comparison of domestic vs. external public debts and proposing debt restructuring for Nigeria.

Question

Nigeria has contracted a number of debts obligations from both domestic and external sources.

a. What comparisons can you make between domestic and external public debts?
(9 Marks)

b. Formulate a debt restructuring method as a strategy for debts management in Nigeria.
(6 Marks)

Answer

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Tags: Debt Restructuring, Domestic Debt, External Debt, Financial management, Public Debt, Treasury Management
Level: Level 2

Topic: Public Sector Reforms

PSAF – May 2021 – L2 – Q3a – Treasury Management in the Public Sector

Explain strategies to enhance cash management and factors affecting its effectiveness in public finance.

Question

Cash management implemented by the Budget Office of the Federation (BoF) was to ensure that the right amount of money is made available to fund government expenditure in a timely manner as well as meeting its obligations as they fall due.

Required:
Explain FIVE strategies to enhance cash management control and FIVE factors militating against effective cash management. (10 Marks)

Answer

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Tags: Budget Office, Cash Management, Financial Control, Public Expenditure, Treasury Management
Level: Level 2

Topic: Treasury Management in the Public Sector
Series: MAY 2021

PSA&F – Nov 2019 – L2 – Q6a – Government Revenue

Explains three ways to authorize payments from the Consolidated Revenue Fund (CRF) and discusses two statutory payments permitted by law to be charged directly to the CRF.

Question

The objective of public financial management is to safeguard public funds from mismanagement. One way to achieve this is by ensuring that payments from the Consolidated Revenue Fund (CRF) are properly authorized.

Required:

Identify and explain THREE ways to authorize payments from the CRF.
Discuss TWO statutory payments that can be charged directly to the CRF.

Answer

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Tags: Consolidated Revenue Fund (CRF), Government Payments, Public Financial Management, Treasury Management
Level: Level 2

Topic: Government Revenue
Series: NOV 2019

AFM – May 2019 – L3 – Q5a – The role of the treasury function in multinationals

Calculate intragroup currency transfers through netting and discuss the pros and cons of using currency options versus futures for hedging net exposures.

Question

Edi Ltd, based in Accra, Ghana, is a multinational company with two wholly-owned subsidiaries: Gil Plc based in Nigeria and Zep Ltd based in South Africa. Until recently, the Edi group has been doing well, returning a stable level of dividends to its shareholders. The financial performance of the Edi group has dipped in the past two years. In the last quarter of last year, the directors approved the establishment of a central treasury department based at the group’s headquarters in Accra. It is believed that the central treasury function will help boost effectiveness and efficiency in the group’s liquidity management, currency risk management, dividend remittances, and borrowing.

Intragroup Currency Transfers:
There are a lot of intragroup credit transactions that are often settled independently between the parties involved. This year, the treasury department has been tasked to manage the settlement of intragroup indebtedness through netting to reduce the volume of currency transactions. It has been agreed that all settlements will be made in the Ghanaian cedi at the prevailing spot mid-market exchange rate.

Below is a list of intragroup indebtedness at the end of the first quarter to be settled today:

Required:

i) Suppose the currency netting is implemented. Calculate the intragroup company currency transfers that will be required for settlement by each member of the Edi group.
(6 marks)

ii) Suppose the treasury department is recommending the use of currency futures to hedge net currency exposures. Discuss the advantages and disadvantages of the Edi group using currency options instead of currency futures in hedging net currency exposures.

Answer

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Tags: Currency Futures, Currency Hedging, Currency Transfers, Intragroup Transactions, Multinational Finance, Netting, Treasury Management
Level: Level 3

Topic: The role of the treasury function in multinationals
Series: MAY 2019

AFM – May 2016 – L3 – Q3c – The role of the treasury function in multinationals

Prepare a memo explaining the potential benefits of treasury centralization for multinational subsidiaries.

Question

c) Drake Limited is a Ghanaian-registered multinational company with FIVE subsidiaries in Europe, Asia, and Africa. These subsidiaries have traditionally been allowed a large amount of autonomy, but Drake Limited is proposing to centralize most of the group’s treasury management operations.

Required:
Acting as Group Head of Finance for Drake Limited, prepare a memo suitable for distribution to Senior Management of each of the subsidiaries, explaining the potential benefits of treasury centralization. (5 marks)

Answer

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Tags: Centralization, Cost savings, Financial risk, multinational companies, Treasury Management
Level: Level 3

Topic: The role of the treasury function in multinationals
Series: MAY 2016

FM – May 2021 – L2 – Q4b – Treasury Management

Explain interest rate risk and suggest two ways of managing an entity’s exposure to it.

Question

b) Most large companies maintain a treasury department to handle some specialized functions in finance. One of such functions is the management of financial risk, which includes interest rate risk.

Required:

Explain interest rate risk and suggest two ways of managing an entity’s exposure to interest rate risk. (5 marks)

Answer

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Tags: Hedging, Interest Rate Risk, Risk Management, Treasury Management
Level: Level 2

Topic: Treasury management
Series: MAY 2021

FM – Nov 2021 – L3 – Q4 – Corporate Governance and Financial Strategy

Assess LL's corporate objectives, the finance director's view, and treasury strategies within a low-interest economic environment.

Question

Required:

Answer

Find Related Questions by Tags, levels, etc.

Topic: Corporate Governance and Financial Strategy

PSAF – Nov 2014 – L2 – Q6 – Public Sector Reforms

Comparison of domestic vs. external public debts and proposing debt restructuring for Nigeria.

Question

Nigeria has contracted a number of debts obligations from both domestic and external sources.

a. What comparisons can you make between domestic and external public debts?
(9 Marks)

b. Formulate a debt restructuring method as a strategy for debts management in Nigeria.
(6 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Debt Restructuring, Domestic Debt, External Debt, Financial management, Public Debt, Treasury Management
Level: Level 2

Topic: Public Sector Reforms

PSAF – May 2021 – L2 – Q3a – Treasury Management in the Public Sector

Explain strategies to enhance cash management and factors affecting its effectiveness in public finance.

Question

Required:
Explain FIVE strategies to enhance cash management control and FIVE factors militating against effective cash management. (10 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Budget Office, Cash Management, Financial Control, Public Expenditure, Treasury Management
Level: Level 2

Topic: Treasury Management in the Public Sector
Series: MAY 2021

PSA&F – Nov 2019 – L2 – Q6a – Government Revenue

Explains three ways to authorize payments from the Consolidated Revenue Fund (CRF) and discusses two statutory payments permitted by law to be charged directly to the CRF.

Question

Required:

Identify and explain THREE ways to authorize payments from the CRF.
Discuss TWO statutory payments that can be charged directly to the CRF.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Consolidated Revenue Fund (CRF), Government Payments, Public Financial Management, Treasury Management
Level: Level 2

Topic: Government Revenue
Series: NOV 2019

AFM – May 2019 – L3 – Q5a – The role of the treasury function in multinationals

Calculate intragroup currency transfers through netting and discuss the pros and cons of using currency options versus futures for hedging net exposures.

Question

Below is a list of intragroup indebtedness at the end of the first quarter to be settled today:

Required:

i) Suppose the currency netting is implemented. Calculate the intragroup company currency transfers that will be required for settlement by each member of the Edi group.
(6 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Currency Futures, Currency Hedging, Currency Transfers, Intragroup Transactions, Multinational Finance, Netting, Treasury Management
Level: Level 3

Topic: The role of the treasury function in multinationals
Series: MAY 2019

AFM – May 2016 – L3 – Q3c – The role of the treasury function in multinationals

Prepare a memo explaining the potential benefits of treasury centralization for multinational subsidiaries.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Centralization, Cost savings, Financial risk, multinational companies, Treasury Management
Level: Level 3

Topic: The role of the treasury function in multinationals
Series: MAY 2016

FM – May 2021 – L2 – Q4b – Treasury Management

Explain interest rate risk and suggest two ways of managing an entity’s exposure to it.

Question

b) Most large companies maintain a treasury department to handle some specialized functions in finance. One of such functions is the management of financial risk, which includes interest rate risk.

Required:

Explain interest rate risk and suggest two ways of managing an entity’s exposure to interest rate risk. (5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Hedging, Interest Rate Risk, Risk Management, Treasury Management
Level: Level 2

Topic: Treasury management
Series: MAY 2021

Question Tag: Treasury Management

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FM – Nov 2021 – L3 – Q4 – Corporate Governance and Financial Strategy

Assess LL's corporate objectives, the finance director's view, and treasury strategies within a low-interest economic environment.

Required:

PSAF – Nov 2014 – L2 – Q6 – Public Sector Reforms

Comparison of domestic vs. external public debts and proposing debt restructuring for Nigeria.

PSAF – May 2021 – L2 – Q3a – Treasury Management in the Public Sector

Explain strategies to enhance cash management and factors affecting its effectiveness in public finance.

PSA&F – Nov 2019 – L2 – Q6a – Government Revenue

Explains three ways to authorize payments from the Consolidated Revenue Fund (CRF) and discusses two statutory payments permitted by law to be charged directly to the CRF.

AFM – May 2019 – L3 – Q5a – The role of the treasury function in multinationals

Calculate intragroup currency transfers through netting and discuss the pros and cons of using currency options versus futures for hedging net exposures.

AFM – May 2016 – L3 – Q3c – The role of the treasury function in multinationals

Prepare a memo explaining the potential benefits of treasury centralization for multinational subsidiaries.

FM – May 2021 – L2 – Q4b – Treasury Management

Explain interest rate risk and suggest two ways of managing an entity’s exposure to it.

FM – Nov 2021 – L3 – Q4 – Corporate Governance and Financial Strategy

Assess LL's corporate objectives, the finance director's view, and treasury strategies within a low-interest economic environment.

Required:

PSAF – Nov 2014 – L2 – Q6 – Public Sector Reforms

Comparison of domestic vs. external public debts and proposing debt restructuring for Nigeria.

PSAF – May 2021 – L2 – Q3a – Treasury Management in the Public Sector

Explain strategies to enhance cash management and factors affecting its effectiveness in public finance.

PSA&F – Nov 2019 – L2 – Q6a – Government Revenue

Explains three ways to authorize payments from the Consolidated Revenue Fund (CRF) and discusses two statutory payments permitted by law to be charged directly to the CRF.

AFM – May 2019 – L3 – Q5a – The role of the treasury function in multinationals

Calculate intragroup currency transfers through netting and discuss the pros and cons of using currency options versus futures for hedging net exposures.

AFM – May 2016 – L3 – Q3c – The role of the treasury function in multinationals

Prepare a memo explaining the potential benefits of treasury centralization for multinational subsidiaries.

FM – May 2021 – L2 – Q4b – Treasury Management

Explain interest rate risk and suggest two ways of managing an entity’s exposure to it.

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Question Tag: Treasury Management

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FM – Nov 2021 – L3 – Q4 – Corporate Governance and Financial Strategy

Assess LL's corporate objectives, the finance director's view, and treasury strategies within a low-interest economic environment.

Required:

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PSAF – Nov 2014 – L2 – Q6 – Public Sector Reforms

Comparison of domestic vs. external public debts and proposing debt restructuring for Nigeria.

You're reporting an error for "PSAF – Nov 2014 – L2 – Q6 – Public Sector Reforms"

PSAF – May 2021 – L2 – Q3a – Treasury Management in the Public Sector

Explain strategies to enhance cash management and factors affecting its effectiveness in public finance.

You're reporting an error for "PSAF – May 2021 – L2 – Q3a – Treasury Management in the Public Sector"

PSA&F – Nov 2019 – L2 – Q6a – Government Revenue

Explains three ways to authorize payments from the Consolidated Revenue Fund (CRF) and discusses two statutory payments permitted by law to be charged directly to the CRF.

You're reporting an error for "PSA&F – Nov 2019 – L2 – Q6a – Government Revenue"

AFM – May 2019 – L3 – Q5a – The role of the treasury function in multinationals

Calculate intragroup currency transfers through netting and discuss the pros and cons of using currency options versus futures for hedging net exposures.

You're reporting an error for "AFM – May 2019 – L3 – Q5a – The role of the treasury function in multinationals"

AFM – May 2016 – L3 – Q3c – The role of the treasury function in multinationals

Prepare a memo explaining the potential benefits of treasury centralization for multinational subsidiaries.

You're reporting an error for "AFM – May 2016 – L3 – Q3c – The role of the treasury function in multinationals"

FM – May 2021 – L2 – Q4b – Treasury Management

Explain interest rate risk and suggest two ways of managing an entity’s exposure to it.

You're reporting an error for "FM – May 2021 – L2 – Q4b – Treasury Management"

FM – Nov 2021 – L3 – Q4 – Corporate Governance and Financial Strategy

Assess LL's corporate objectives, the finance director's view, and treasury strategies within a low-interest economic environment.

Required:

You're reporting an error for "FM – Nov 2021 – L3 – Q4 – Corporate Governance and Financial Strategy"

PSAF – Nov 2014 – L2 – Q6 – Public Sector Reforms

Comparison of domestic vs. external public debts and proposing debt restructuring for Nigeria.

You're reporting an error for "PSAF – Nov 2014 – L2 – Q6 – Public Sector Reforms"

PSAF – May 2021 – L2 – Q3a – Treasury Management in the Public Sector

Explain strategies to enhance cash management and factors affecting its effectiveness in public finance.

You're reporting an error for "PSAF – May 2021 – L2 – Q3a – Treasury Management in the Public Sector"

PSA&F – Nov 2019 – L2 – Q6a – Government Revenue

Explains three ways to authorize payments from the Consolidated Revenue Fund (CRF) and discusses two statutory payments permitted by law to be charged directly to the CRF.

You're reporting an error for "PSA&F – Nov 2019 – L2 – Q6a – Government Revenue"

AFM – May 2019 – L3 – Q5a – The role of the treasury function in multinationals

Calculate intragroup currency transfers through netting and discuss the pros and cons of using currency options versus futures for hedging net exposures.

You're reporting an error for "AFM – May 2019 – L3 – Q5a – The role of the treasury function in multinationals"

AFM – May 2016 – L3 – Q3c – The role of the treasury function in multinationals

Prepare a memo explaining the potential benefits of treasury centralization for multinational subsidiaries.

You're reporting an error for "AFM – May 2016 – L3 – Q3c – The role of the treasury function in multinationals"

FM – May 2021 – L2 – Q4b – Treasury Management

Explain interest rate risk and suggest two ways of managing an entity’s exposure to it.

You're reporting an error for "FM – May 2021 – L2 – Q4b – Treasury Management"

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