Essentials of Treasury Management, 1st Edition
By MFTC

Essentials of Treasury Management, First Edition

Format: Book

* Summary

The Essentials of Treasury Management 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 best practices and roles defined in this work, as demonstrated through the CTP, ensures that professionals are prepared for the changing requirements of the profession.

Under development for over two years, more that 40% of the information contained within the Essentials of Treasury Management is either entirely new or substantially revised. Five new chapters were created for the book to reflect not only the treasury professionals’ expanded role in areas such as working capital and corporate finance issues but also the introduction of new technologies as well as the increased regulatory environment and scrutiny.

The new body of knowledge builds on the previous Essentials of Cash Management, 7th Edition, while also capturing important trends, both evolutionary and revolutionary, that are shaping the treasury profession. Electronic commerce and globalization are examples of evolutionary trends, while the impact of legislation such as Sarbanes-Oxley and Check 21 are examples of revolutionary trends. Other new or expanded topics that are addressed include: Corporate Governance and Ethics; International Treasury Management; and Outsourcing.

Excerpt

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

• Capital Structure: A company must decide on a desired capital structure, including the relative proportions of debt and equity. The optimal mix of debt and equity financing vary greatly from one company or industry to another.
• Investment Decisions: Companies have limited financial resources. Therefore, important decisions include determining what projects are appropriate and how much the company should invest in each venture. This analysis involves estimating both the risks and the returns of a given project. Investment decisions also encompass divestiture decisions such as the sale of a division or a subsidiary or the discontinuance of a product line because a company’s capital resources may be utilized more effectively elsewhere.
• Financing Decisions: A company weighs several interrelated factors when deciding whether or not to raise additional debt or equity in order to finance projects. For example, a company’s capacity to raise different types of capital is influenced by its perceived risk profile, which in turn influences the company’s existing capital structure. The projected risk profile of an organization is based upon a proposed debt or equity offering that can influence its ability to market such an offering.
• Dividend Decisions: The earnings of a company belong to its stockholders but company management decides how much of the earnings are paid out in the form of dividends versus how much is retained to be reinvested in future operations. This decision is often guided by shareholder expectations, which may be dependent on a company’s industry or stage of development. Dividend decisions vary widely by company and industry and payouts may be restricted by covenants contained in a company’s debt agreements.

Financial Organization
A company’s financial organization should be structured to facilitate the achievement of its overall objectives. Therefore, financial organizational structures vary significantly from industry to industry and from company to company. This topic is covered in detail in Chapter 2, Treasury Organizational Structure....

* source: The AFP.

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