Section II: Essay and Problem Questions (attempt all questions) (15 Marks) QUESTION 1: In-corporates, treasury overlaps the financial management function, although the former has the more specific focus mentioned, while the latter is a broader field. Analyze treasury management, financial functions of treasury, and decentralized treasury management with its advantages and disadvantages. (3 Marks)
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Treasury management plays a crucial role in ensuring an organization has sufficient liquidity to meet its obligations while optimizing the return on investments. This includes cash flow management, managing banking relationships, and risk management associated with foreign exchange and interest rates. Effective treasury management aligns with the overall financial strategy, allowing organizations to invest surplus funds wisely and minimize financial risks through careful forecasting and analysis. Decentralized treasury management can empower local managers to make financial decisions that align closely with the operational needs of a specific division or region. However, while it promotes agility and responsiveness, it may lead to inconsistencies in financial policies and expose the organization to greater risks if not properly coordinated. Striking the right balance between centralized oversight and decentralized execution can enhance financial performance while maintaining control over budgetary and financial outcomes.
