Collection float and net float are two related concepts that are used to measure the timing and availability of funds within a company’s cash management system. Collection float refers to the time delay between when a company receives a payment and when the funds are actually credited to its bank account. For example, if a… Read More »
Disbursement float is the time delay between when a company initiates a payment and when the payment is actually debited from its bank account. Disbursement float represents the time period during which a company still has access to the funds that it has earmarked for payment, before those funds are actually withdrawn from its account.… Read More »
In finance, float refers to the difference between the balance shown in a company’s bank account and the actual amount of money available in the account. The term “float” is often used to describe the time delay between when a payment is made and when it is actually processed and cleared by the bank. For… Read More »
Cash management and liquidity management are related concepts, but they refer to slightly different aspects of a company’s financial management. Cash management refers to the process of managing the inflows and outflows of cash within a business in order to optimize cash balances and ensure that the business has sufficient cash on hand to meet… Read More »
While holding cash can provide a number of benefits to a business, there are also costs associated with holding cash in business, including: Overall, the cost of holding cash depends on a variety of factors, including interest rates, inflation rates, and the specific needs and circumstances of the business. Businesses must carefully weigh the benefits… Read More »
There are several reasons why businesses may choose to hold cash, including: Overall, holding cash can provide businesses with financial stability and flexibility, allowing them to weather unexpected events and take advantage of opportunities when they arise.
Liquidity management refers to the process of managing and monitoring the availability and use of cash and other liquid assets in order to meet a company’s financial obligations and maintain financial stability. Effective liquidity management involves ensuring that a company has sufficient cash reserves to cover its short-term expenses and debts, while also optimizing the… Read More »
Floating Exchange Rate Definition Free floating or Clean floating of a currency occurs when its exchange rates are left free to be determined by the market forces of demand for and supply of that currency in foreign exchange market with no floor or ceiling vis-à-vis the dollar, gold, SDRs, or any other currency. The government… Read More »
Control and Monitoring of Exchange Position As a matter of policy each bank establishes “limits” for various levels.in case a bank has more centers dealing in foreign exchange, the limit is allocated to each center. Such limits are periodically reviewed and revised.in the event of a special situation arising interim limits are approved for a… Read More »
Foreign Trade Risks Why is foreign exchange risk so important today? there are three broad reasons: i. The growth in international trade and financing. ii. The increased magnitude of exchange rate fluctuations. iii. The increasing visibility of the foreign exchange gains/loss items in corporate financial statement. The first two factors are the source of the… Read More »