Managing Corporate Liquidity

by Moir,Lance; Moir,Lance

• ISBN13: 9781579581855
• ISBN10: 1579581854
• Edition: 1st
• Format: Hardcover
• Copyright: 1999-01-01
• Publisher: Routledge

Summary

Cash, as every manager knows, is the life-blood of a business. Managing cash flow, interest rates, and banking relations are some of the most important functions of treasury management.Managing Corporate Liquidityis a practical and concise guide designed specifically to offer advice and insight into the fundamental decisions of liquidity management. This book also takes into account the increased use of liquidity instruments, looking in detail at interest-rate hedging and the various control mechanisms that have been developed in recent years. An essential guide for treasury managers, financial managers at all levels, and entrepreneurs, business owners, and their advisers.

Table of Contents

Preface	p. ix
What is liquidity and how does it arise?	p. 1
What is liquidity?	p. 1
How does liquidity arise?	p. 2
How does liquidity management fit into treasury policy?	p. 4
The objectives of cash management policy	p. 5
What are the objectives of short term investment management?	p. 6
Liquidity in different industries	p. 7
Forecasting liquidity	p. 11
The importance of the cash forecast	p. 11
Uses of cash forecasts	p. 16
Preparation of the cash forecast	p. 17
Problems in groups	p. 34
Obtaining the opening position and other data	p. 38
Currencies and multinational groups	p. 39
Conclusion	p. 39
The management of uncertainty	p. 41
Checking against past forecasts	p. 43
How much liquidity is needed?	p. 46
Money transmission and bank services	p. 51
Managing your banker	p. 51
Bank products for money transmission and bank account management	p. 54
Organising group bank accounts	p. 63
Balance reporting systems	p. 69
Conclusion	p. 71
The structure of interest rates and the yield curve	p. 73
Bid and offer	p. 75
LIBOR and basis points	p. 75
Interest rates and the yield to maturity	p. 76
Total yield	p. 78
Yield and the yield curve	p. 79
Disaggregation	p. 83
Selecting an interest period	p. 85
Interpreting the yield curve and taking a view on rates	p. 89
Risk	p. 90
Different interest rate bases	p. 91
Liquidity and the use of deposit and borrowing instruments	p. 95
Deposit instruments	p. 96
Different currencies	p. 105
Obtaining and selling deposit instruments	p. 105
Borrowing instruments	p. 107
Marginal sources of liquidity	p. 113
Obtaining borrowing instruments	p. 114
Interest rate risk: definition and management	p. 115
What is risk?	p. 116
Should interest rate risk be managed?	p. 117
The measurement of interest rate risk	p. 118
Setting interest rate policy	p. 125
Instruments for interest rate management	p. 129
Forward forwards	p. 130
Forward rate agreements (FRAs)	p. 130
Financial futures	p. 133
Swaps and longer term instruments	p. 135
Options	p. 136
Caps, floors and collars	p. 141
A note on taxation	p. 145
Liquidity management in practice	p. 147
The general approach	p. 148
Case studies	p. 148
Conclusion	p. 163
Organising liquidity management	p. 165
Treasury policy in context	p. 166
Putting liquidity into practice	p. 168
Dealing and controls	p. 171
Glossary	p. 179
Useful calculations	p. 187
Further reading	p. 191
Index	p. 193
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