TUGAS QUIZ

MANAJEMEN KEUANGAN
(Dr. Nisrul Irawati, MBA)

OLEH

MAULANA FADJAR
207007134
Magister Manajemen 49-2

PROGRAM STUDI MAGISTER MANAJEMEN

SEKOLAH PASCASARJANA
UNIVERSITAS SUMATERA UTARA
MEDAN
2021
Quiz : Cash Management and Marketable Securities
1. Why do firms holds some of their assets in the form of cash?
a. The need for transaction.
Because cash inflows are not the same as cash outflows, cash is needed to carry out
business transactions, such as paying labor wages, taxes, dividends and procuring
inventories.
b. The need for vigilance
Because of the uncertainty of future cash flows and the company's ability to borrow to
increase the need for funds. If the company can know with certainty its cash flow, the
need for cash just in case will be relatively small.
c. The need for speculation
The need for cash to earn profits due to changes in the price of securities. If you think
interest rates will rise and the price of securities will fall, it is advisable to hold cash –
including funds held in banks – until interest rates rise again. Conversely, when interest
rates are expected to fall, it is better to invest in securities, and sell them when the price
of securities increases.
2. What is the benefit from using the lockbox system?
Lockbox banking is offered by banks to help receive customer payments. Instead of
sending payments to a company, lockbox payments are sent to a special post office box, where
they’re collected and deposited directly by the bank. Once the bank processes these payments,
they deposit the funds into the company’s bank account, and deliver financial records to
accounts receivable. In short: It’s meant to streamline the collections and payment processing
process by cutting out the middle man.
Benefit from using the lockbox system
a. Lockbox Systems Reduce Accounting Errors
Being audited is a small business’ worst nightmare because no matter how tight your
records are, there’s always room for error. Lockbox payments significantly reduce this
likelihood by streamlining payment processing. It works like this:

Each day, the bank takes all the PO Box deposits to its processing center. There, it’s
deposited into a business’ bank account. They also scan a business’ remittance
documents so the payment information is securely captured, then they transmit the
overall update directly to accounts receivable. All of these records are backed up,
securely stored and available for easy access should you need to refer to them later (or,
in the event that you’re getting audited and somehow lost your copies).

It’s always wise to backup your financial records, but one of the main advantages of a
lockbox system is that the bank will do this for you. It’s stress free, and it also reduces
any possible accounts receivable errors on your general ledger because the bank is
handling all the deposits. You’re not relying on a person sitting in an office matching
each single payment to its invoice and inputting everything in your accounting system
manually.
 b. Lockbox Systems Allow Faster Access To Payments
One of the major advantages of lockbox systems is speed. It speeds up payment
processing at every turn. According to Dean Cusumano, a senior account executive at
Agilis System who specializes in increasing business efficiency, banks have a special
ZIP code that they use for lockbox payments to fast track its delivery through the postal
system. Banks also have the ability to process these payments beyond traditional bank
hours, which means you’re not bound to the traditional limitations of retail banking.

In addition, banks check their lockboxes for payments several times a day, which means
that checks are generally deposited into a business’ bank account on the same day
they're received. This is particularly important for businesses that may not have a lot of
cash on hand or operate on slim margins that greatly rely on each customer’s individual
payment.

c. Lockbox Systems Are Very Secure

Bank lockboxes are a great option to increase security around payments. Generally,
small businesses aren’t the most secure – especially if checks are being mailed to a
storefront mailbox and kept in an office until they’re deposited at the bank. In truth, PO
boxes are far more secure than your average curbside mailbox, and you don’t have to
worry about checks going missing from your office (even if they’re just accidentally
misplaced) when the bank is handling it all.
3. Suppose the post office develops new technology that speed up mail delivery . How would
such a development affect a firm’s cash management decision?
Information technology development has significantly changed the businesses. Various
kinds of information systems which use information technology are Electronic Data Processing
Systems (EDP), Data Processing Systems (DPS), Decision Support System (DSS),
Management Information System (MIS), Executive Information Systems (EIS), Expert System
(ES) and Accounting Information System (AIS). The development of information technology
has also influenced management accounting dicipline as the producer of information for
planning, controling and decision making . These influences, of course, has advantages and
diadvantages for the companies.
4. The Rose Company has determined that its Cash EOQ is $ 100.000. What does this mean.
If the rose company determines the EOQ is $100.000 then the cash held for further
orders or re-orders is worth $100.000.
5. The Orange Company is applying the Miller-Orr model to their cash management. They
determined that the return point is $12,000, the lower limit is $ 5,000 , and the upper limit is $
26,000. Explain this information means to the Orange Company’ s cash management.
Cash management is a comprehensive phrase that refers to the gathering, accumulation,
and expenditure of the company, as well as the monitoring of liquidity, cash balance
management, and narrow investments.
The lower limit, as per the Miller-Orr model, is the smallest financial safety margin determined
by the company's management. The safety cash balance at Pear Company is $7,000. The spread
is the difference between the upper and lower limits, which in this case is $21,000 ($26,000-
$25,000). And the target cash amount is $12,000, implying that if the cash hits the maximum
or lower limits, the target cash balance must be restored.
The lower limit, as per the Miller-Orr model, is the smallest financial safety margin determined
by the company's management. The safety cash balance at Pear Company is $7,000. The spread
is the difference between the upper and lower limits, which in this case is $21,000 ($26,000-
$25,000). And the target cash amount is $12,000, implying that if the cash hits the maximum
or lower limits, the target cash balance must be restored.