115 CFA
File: Corporate Finance - Reading 35 - 2. Managing the Cash Position

2. Managing the Cash Position

d. describe how different types of cash flows affect a company's net daily cash position;

What is the objective of managing short-term cash flows?
Minimizing costs. The objective of managing short-term finances and doing short-term financial planning is to find the optimal trade-off between these two major costs:
- carrying costs, the return forgone by keeping too much invested in short-term assets such as cash
- shortage costs, the cost of running out of short-term assets

  • CFA