Page 269 - DMGT207_MANAGEMENT_OF_FINANCES

Management of Finances

Notes 5. What are the benefits, costs and risks of an aggressive funding strategy and of a conservative
funding strategy? Under which strategy is the borrowing often in excess of the actual
need?
6. "Cash budgeting or short-term cash forecasting (budgeting) is the principal tool of cash
management." Discuss.

7. Efficient cash management will aim at maximizing the cash inflows and slowing cash
outflows". Discuss.
8. Briefly discuss the various avenues or opportunities available to the companies to park
their surplus funds for a short-term.
9. Analyse the importance of the preparation of the cash budget for the corporates.
10. "Management of cash flows plays a very important role in cash management". Discuss.

Answers: Self Assessment

1. Speculative 2. organizational structure

3. Cash budget 4. cash flow
5. Lock-box 6. concentration banking
7. ledger 8. net float

9. carrying 10. transaction
11. surplus 12. currency
13. operating 14. conservative
15. Safety 16. Marketability

11.12 Further Readings

Books Chandra, P., Financial Management - Theory and Practice, New Delhi, Tata McGraw
Hill Publishing Company Ltd., 2002, p. 3.
Dr Pradeep Kumar Sinha, Financial Management, New Delhi, Excel Books, 2009.
Van Horne, J.C. and Wachowicz, Jr, J.M., Fundamentals of Financial Management,
New Delhi, Prentice Hall of India Pvt. Ltd., 1996, p. 2.

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