Essentials of Treasury Management, Second Edition

Essentials of Treasury Management, Second Edition: Members:$132.00; Non-Members:$192.00; Format: Book; + Add to Cart

Summary

The Essentials of Treasury Management (2nd edition), was developed by a panel of experts to reflect the significant role treasury professionals take in their organizations and the global capital markets. Mastery of the functions, processes and best practices defined in this work ensures that professionals are prepared to meet the demands of corporate treasury job responsibilities, as demonstrated through the Certified Treasury Professional (CTP) credential.

The Essentials of Treasury Management (2nd edition), not only updates the first edition to reflect the many changes that have taken place in the last three years to what treasury professionals do and how they do, it also now provides many of the “whys”. This edition shows the reader why things are done; particularly regarding how they impact the economic value of the business.

Here’s some of what’s new in the second edition:

Introduction of the relationship between treasury activities, broader financial decisions, and firm value; and threading this theme throughout the book.
Explanation of how the Federal Reserve uses its ability to alter liquidity in the commercial banking system, thereby influencing the supply of money, credit, and interest rates in the macro-economy.
Expanded discussion of the interpretation of financial ratios and how ratios are used in combination to interpret and evaluate performance.
Incorporation of the many important changes in payment systems, especially through the use of imaging technology.
Expanded section on cash forecasting methods including additional techniques to assist in anticipating and controlling future events.
Expanded description of the forms of long-term financing, and the appropriate use of specific forms. The importance, calculation, and use of a firm’s cost of capital, how to calculate the cost of different sources of funds and how to use the difference sources of capital.
More detailed description of lease types, use of leasing in lieu of borrowing funds, and a detailed explanation of the lease vs. borrow-and-buy decision.
Expanded discussion of dividend policy and its variants – especially stock (as opposed to cash) dividends and share repurchase programs.
Expanded and updated description of the procedures and regulations associated with international payment systems, including changes particular to the Economic and Monetary Union (EMU) in Europe and the Single Euro Payments Area (SEPA).
Expansion and clarification of the presentation of operational and insurance risk management.
Expanded treatment of ethics, especially regarding specific areas of responsibility and concerns in the treasury area.
An updating of the laws and regulations that govern retirement funds management. Emphasis is on fiduciary responsibility in this area, and a clarification of the new requirements relating to education and advice that may be provided to retirement plan participants.
Elaboration of the process for selecting a financial service provider, and how to assess the financial stability and durability of service providers.

EXCERPT

Corporate Financial Decisions
Among the most critical financial decisions a company must make are those involving financing, capital structure, asset investments and dividends:

Financing Decisions: A company weighs several interrelated factors when deciding whether to raise debt or equity to finance asset expansion. Factors include the overall risk of the business(es) the company is in, the variability and predictability of revenues, stability of costs, intensity of competition, and other reasons. The choice of financing with debt or equity also is influenced by the company’s ability to market a particular form of debt or equity in market conditions prevailing at the time of issuance.
Capital Structure Decisions: A company must decide on the best mix of long-term debt and equity, termed a target capital structure. The target capital structure should minimize the overall cost of funds while preserving an acceptable degree of financial flexibility. The appropriate mix of debt and equity financing varies significantly among industries and companies.
Asset Investment Decisions: Because companies have limited financial resources, it is important to assess carefully which projects to fund and how much the company should invest in various types of strategic assets that compete for funding. This analysis involves estimating both the risks and returns of a given project. Investment decisions also encompass divestiture decisions such as the sale of a division or subsidiary, or the discontinuance of a product line because a company’s capital resources may be utilized more effectively elsewhere.
Dividend Decisions: A company’s earnings belong to its stockholders, and may be reinvested in assets and/or paid out to stockholders as a cash dividend. The board of directors decides whether to pay a dividend. Oftentimes, this decision is guided by shareholder expectations, which may be dependent on a company’s industry, stage of development or dividend payment history. Dividend decisions vary widely by company and industry, and payouts may be restricted by covenants contained in a company’s debt agreements.