TP TMI flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Cash conversion cycle

Days inventory outstanding plus days sales outstanding minus days payables outstanding; it measures how long cash is tied up in operations before collection from customers.

Miller-Orr model

A stochastic cash balance model setting upper and lower control limits; when the balance hits a limit, treasury returns it to a computed return point between the limits.

Positive pay

A bank service where the company sends a file of issued payments; the bank rejects any presented item whose amount, date, or serial number does not match the file.

RTGS payment system

Real-time gross settlement processes each payment individually and irrevocably in central bank money, giving immediate finality but requiring sufficient intraday liquidity from the sender.

Collection float

The difference between the book balance and the available balance while deposited checks await clearing; it represents funds not yet usable by the company.

Expected shortfall

The average loss conditional on losses exceeding the Value at Risk threshold; unlike VaR it is subadditive and therefore a coherent risk measure.

Modified duration

Macaulay duration divided by one plus the yield per period; it approximates the percentage price change of a bond for a small change in yield.

Covered interest parity

The principle that the forward exchange rate equals the spot rate adjusted by the interest rate differential between the two currencies, preventing arbitrage.

Payer interest rate swap

A swap where the holder pays fixed and receives floating; its value rises when market interest rates increase above the contracted fixed rate.

Cash flow at risk

The maximum adverse deviation of operating cash flow from budget over a horizon at a stated confidence level, capturing transaction and commodity exposures.

Weighted average cost of capital

The blended after-tax cost of debt and equity weighted by market value; it is the discount rate applied to projects of average business risk.

Cost of forgoing discount

The annualized cost of not taking a supplier discount, computed as discount percent over one minus discount percent times 365 divided by extra days.

IFRS 16 lessee treatment

The lessee records a right-of-use asset and lease liability at present value of payments; expense becomes depreciation plus interest, front-loaded versus straight-line rent.

Incurrence covenant

A debt covenant tested only when the borrower takes a specified action, such as issuing new debt or paying a dividend, rather than at each reporting date.

Levered beta

A measure of equity risk reflecting both business risk and financial leverage; it equals unlevered beta times one plus the after-tax debt-to-equity ratio.

Discount yield

A money market yield quoting the discount from face value, annualized on a 360-day basis: discount divided by face, times 360 over days to maturity.

Commercial paper

Unsecured short-term corporate debt issued at a discount, commonly capped at 270 days in the US to avoid registration, typically backed by committed credit lines.

Repo haircut

The percentage by which collateral value exceeds the cash lent in a repurchase agreement, protecting the cash lender against collateral price declines.

Gordon growth model

Equity valuation formula dividing next period dividend by the difference between required return and constant growth; valid only when required return exceeds growth.

Expected loss formula

Expected loss equals probability of default multiplied by loss given default; adding risk and liquidity premiums gives the observed credit spread.

ISO 20022 camt.053

The end-of-day bank statement message in the ISO 20022 standard, replacing SWIFT MT940 and carrying richer structured remittance and reference data.

Straight-through processing rate

The share of payments that post without manual intervention; it is calculated as automated payments divided by total payments and is a core treasury efficiency metric.

In-house bank

A treasury structure where the center acts as internal counterparty to subsidiaries, enabling internal funding, multilateral netting, and reduced external bank spreads.

Maker-checker control

A dual authorization rule requiring one user to prepare a payment and a different user to approve it before release, reducing fraud and error risk.

Host-to-host connectivity

A direct, usually scheduled batch link between company systems and a bank, exchanging payment files and statements without a manual portal step.

Beneficial ownership threshold

The ownership percentage at which a natural person must be identified under KYC rules; the FATF standard uses 25 percent or more.

Sanctions screening

Checking counterparties and payments against government lists such as OFAC SDN and the EU consolidated list before release, with documented disposition of matches.

Market abuse regulation

Rules prohibiting insider dealing, unlawful disclosure, and market manipulation; treasury maintains restricted lists and deals only with approved counterparties.

Structuring red flag

Splitting transactions below reporting thresholds to avoid detection; it is a classic money laundering indicator requiring suspicious activity reporting.

Notional cash pooling

A bank arrangement that offsets credit and debit balances across accounts for interest purposes without physically transferring cash between the participating accounts.

Multilateral netting

Offsetting intercompany payables and receivables across all group entities into a single net settlement per currency, reducing gross payment volume and FX costs.

Counterparty exposure limit

A policy cap on deposits and derivative exposure per counterparty, set by minimum rating, tenor, and per-name amount, with documented escalation for breaches.