Sikkim-Manipal University of Health Medical and Technological Sciences (SMUHMTS) 2009 Post Graduate Diploma Bank management MA0033 - Treasury Management - Assignments for spring session - Quest

Q.2. Company A and B are offered the subsequent interest rates on a loan of Rs5 million by their banks. You are needed to construct an interest rate swap for these firms netting 0.5% to the bank acting as intermediary and be equally attractive to A and B
Company Fixed Rate Floating Rate
A 15% MIBOR + 2%
B 18% MIBOR + 2.5%
Q.3. Do you think that “Central Bank’s Intervention’ in the foreign exchange markets to maintain the stability of domestic currency is good from economic growth point? If Yes/No Substantiate your ans with reasons.
Q.4. ‘Liquidity management’ is a key to the success of earning more profits for a banking company. Support this view with valid reasons.
Q.5. Comment on the objectives of Credit Risk Rating in the background of latest bank failures. )
Q.6. Case study : Analyze the case and ans the ques. subsequent ques..
1. Why Treasurers resort to early payment discounts?
2. How EIPP program can help to achieve the objective?
3. ‘Managing Working Capital’ is a major challenge to ‘The Treasury Department’. Comment
Working Capital Management: Driving Additional Value Within AP

Treasurers typically face the dilemma of trying to balance early payment discounts with maximizing float from short-term cash. Adding a purchasing card settlement capability within an EIPP program can be a major help.



Regardless of the economic climate, companies are always seeking new and innovative ways to decrease costs and increase revenues. 1 approach attracting attention from leading financial executives lately involves maximizing working capital - or extracting more value from shortterm cash.
Accounts payable (AP) and procurement professionals often help their organizations realize working capital opportunities by streamlining processes for paying suppliers and securing the best supplier discounts and terms. Treasury professionals typically manage working capital through days payable outstanding (DPO) and by optimizing the use of cash.
Reaching these goals on a consistent basis, however, can be a daunting task as companies are forced to strike a balance ranging from capturing the best early payment discounts and maximizing the "float" from short-term cash. Organizations can now leverage innovative methods to better utilize their working capital while balancing the needs of suppliers, procurement, finance and AP and treasury.
Challenges in Managing Working Capital
Companies striving to improve the way they manage working capital often struggle with paper-based, manual invoicing processes that outcome in lengthy invoice cycle times, which in turn makes it difficult to qualify for and capture early payment discounts. Because these companies allocate so much time and energy to simply processing invoices, they are unable to devote the resources needed to strategically identify and work with suppliers.
Multiple groups, including treasury, finance, AP and procurement, impact an organization's ability to manage working capital effectively but often work in silos. While every of these groups has its own goal, the entire organization must be aligned to receive maximum working capital efficiencies.
Treasury, for example, wants to maximize working capital and optimize the use of cash by managing days payable outstanding and capturing negotiated discounts. AP professionals seek to streamline payments, gain processing efficiencies and increase controls and compliance. The procurement department is interested in maintaining good supplier relationships, rationalizing the supply base and negotiating better contract terms.




While these goals may be similar, they are not perfectly aligned. A few - such as managing DPO and paying suppliers early to capture discounts- must be carefully balanced if an organization is to make optimal working capital decisions. Many companies are now turning to electronic invoice presentment and payment (EIPP) solutions as a starting point for increasing process efficiencies to drive working capital initiatives, while a few are combining EIPP with early payment discounting strategies or new, innovative forms of settlement.

Earning:   Approval pending.