Post-test

A Practical Approach for Cashflow Reengineering Course Code 96007

1. One factor that triggered the current reengineering emphasis was:

(a) The cost of information processing
(b) International excess production capacity
(c) The increasing role of management
(d) The growing importance of organized labor

2. Cashflow reengineering is successful because it accomplishes savings without:

(a) Extensive staff downsizing
(b) Emphasizing float improvements
(c) Changes to the organization's value system or philosophy of management
(d) Outsourcing noncore competencies

3. Companies that experience changes in authority and power roles during periods of
restructuring may also experience:
(a) A realignment of line and staff
(b) Overt acts of violence
(c) Distrust of counsel and advice
(d) Minimal resistance

4. Managers may not fully consider the impact of their actions on organizational Cashflow
because:
(a) They may focus on the requirements of their jobs rather than on organizational needs.
(b) Their MBO's may focus on the qualitative aspects of management.
(c) They may assume that cash is the concern of the accountants.
(d) They realize that cash is affected by business decisions made outside of treasury.

185
 186 A Practical Approach for Cashflow Reengineering

5. Cashflow reengineering avoids the mistake of microanalysis by focusing internal improve-

ment efforts or outsourcing on an entire segment of the cashflow timeline, including:
(a) Collections, disbursements, and information systems
(b) Disbursements, information systems, and concentration
(c) Information systems, concentration, and collections
(d) Concentration, collections, and disbursements

6. Cash processing technology in current use includes which of the following?

(a) OCR, MICR, and ACH
(b) ECR, IRR, and ACC
(c) MICR, EFT, and NPV
(d) ACH, ABC, and ABM

7. Collection float measures which portions of the timeline?

(a) Clearing and concentration times
(b) Availability and clearing times
(c) Mail and availability times
(d) Ledger credit and availability times

8. The cost elements in the financing of the balance sheet are:

(a) Dividends and debt interest
(b) Dividends, debt interest, and expected stock price growth
(c) Debt interest and expected stock price growth
(d) Dividends and expected stock price growth

9. Assuming that the lowest explicit (stated) after-tax cost of capital is debt, the overuse of
financial leverage as compared to the industry standard causes:
(a) The optimal balance sheet structure
(b) The highest cash cost for financing
(c) An average cost of capital lower than the industry's average
(d) An average cost of capital higher than the industry's average

10. Which of the following are techniques for determining the profitability of a long-term
business investment?
(a) IRR and NPV
(b) NPV and ECR
(c) ECR and MCC
(d) MCC and ACC

11. Issues to consider in deciding between lockboxing and in-house collections include:
(a) Processing float delays as funds are moved from deposit accounts to the concentra-
tion bank
(b) Control issues involving the possibility of the theft of fiends by employees
(c) Advantages from improved invoice design and timing
(d) Mail float issues involving access to balance reporter information
187 A Practical Approach for Cashflow Reengineering

12. New product developments affecting the traditional purchase-order-payables cycle

include:
(a) Direct deposit and legacy mainframe systems
(b) Legacy mainframe systems and partial reconciliation
(c) Procurement cards and direct deposit
(d) Comprehensive payables and procurement cards

13. The balance reporter provides:

(a) Daily information on account activity, including availability
(b) Daily information on such account activity exceptions as positive pay mismatches
and NSF deposited checks
(c) Monthly information on account activity including debits and credits
(d) Monthly information on bank charges and fees

14. OPQR refers to:

(a) Operations, policies, qualification, reengineering
(b) Outsourcing, procedures, quality, reengineering
(c) Organization, process, quantification, reengineering
(d) Opportunities, plans, questions, reengineering

15. Standards such as benchmarking and management-by-objectives (MBOs) are flawed for
which one of the following reasons:
(a) They measure performance quality but not cost efficiency.
(b) The benchmark or MBO restates the goals of the organization.
(c) Priorities not anticipated when the standards were established may intercede.
(d) The standards are revised to retain relevance to corporate goals.

16. The largest opportunities for cashflow reengineering typically fall outside of the finance
function because:
(a) Sales, production and other functions assume responsibility for the management of
the cash deriving from their activities.
(b) Unlike sales, production, and other functions, finance is a well-defined discipline
with a body of knowledge regarding cash.
(c) Responsibilities for cash are typically assigned to accounting rather than finance staff.
(d) SBU managers generally negotiate with banks directly for their own requirements.

17. The use of the scenario impact table is encouraged to:

(a) Fully examine issues relating to bank and vendor outsourcing
(b) Thoroughly present all available options regarding internal improvements
(c) Avoid the necessity of evaluating the baseline current system
(d) Manage the voluminous data gathered in a cashflow reengineering analysis

18. The modern view of working capital management is that:

(a) Working capital is desirable and a boost to financial performance.
(b) Current assets contribute significantly to return-on-equity.
(c) Current liabilities should be funded from on-going operations rather than from cur-
rent assets.
(d) The current ratio should be minimized to reduce under-performing assets.
 188 A Practical Approach for Cashflow Reengineering

19. In reengineering the payables function, consider implementing which one of the follow-
ing actions?
(a) Pay invoices after the due date.
(b) Automate the payment approval and authorization process.
(c) Eliminate multiple and phony vendors.
(d) Use your bank's partial reconciliation service.

20. To forecast short-term cash, we may attempt to determine patterns of cashflow by day of
the week and day of the month using the:
(a) Regression method
(b) Distribution method
(c), Correlation method
(d) Cash budgeting method

21. An investment mechanism to move balances automatically from your account at the
Close of business, invest the funds overnight, and return the investment to the account
the following morning is called a:
(a) Sweep account
(b) Repo account
(c) Offshore account
(d) Earnings credit account

22. The use of RFPs in selecting banking and vendor services:

(a) Gives preferential treatment to current banks or vendors in the existing relationship
(b) Excludes new banks and vendors from bidding
(c) Focuses on a few product features or price at the exclusion of other important attributes
(d) Permits the objective consideration of all factors in the decision to purchase

23. The use of the RFI process helps buyers locate banks and vendors that:
(a) Provide desired services
(b) Present detailed explanations of processing activities
(c) Offer the lowest price
(d) Meet all systems and technical requirements

24. The manager's job in a cashflow reengineering environment involves:

(a) Rewarding the performance of the business unit (versus that of the organization)
(b) Exploring internal and outsource activities to improve performance
(c) Minimizing the use of methodological processes in analyzing performance
(d) Quantifying performance evaluation

25. Treasury staff require new skills and a focus on concerns not normally considered within
their job descriptions because:
(a) The activities and responsibilities of management are continuously increasing.
(b) Recent legislation and regulations emphasize marketing and manufacturing work rules.
(c) Significant cashflow reengineering opportunities are in areas outside of traditional
treasury.
(d) Outsourcing diminishes the requirement for treasury review of bank and vendor
capabilities.