Liabilities, Liquidity and Cash Management: Balancing Financial Risks

Liabilities, Liquidity and Cash Management: Balancing Financial Risks

By: Dimitris N. Chorafas (author)Hardback

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"This book provides a very helpful and informative insight into an aspect of finance that has become quite intricate and complex but is nevertheless very fascinating."-Dr. Henry Kaufman, President, Henry Kaufman & Company, Inc. Strategies and advice on balancing financial risk for leveraged companies In today's highly leveraged economy, good liabilities management has become vitally important. Entire sectors of the economy, and some of the biggest financial and industrial companies, face dramatic overexposure problems. But adequate internal liability controls can greatly reduce risk. Featuring case studies in a number of industries and examples of both proper and improper liabilities management in major organizations, Liabilities, Liquidity, and Cash Management shows managers, accountants, investment advisors, and other professionals who deal with liabilities and overexposure how they can implement good internal controls on liability and overexposure. It provides modern tools, critical strategies, and timely advice specifically tailored to the needs of companies facing overexposure and debt risk in a volatile economy. Topics include: Loss of capitalization Derivatives Risks of globalization Sensitivity analysis, gap analysis, stress testing, and value-added solution Real-time financial reporting and virtual balance sheets Liquidity management Money markets, yield curves, and interest rates Mismatch risk profiles Credit risk Risk in the new economy

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About Author

DIMITRIS N. CHORAFAS, PhD, has worked internationally as an advisor to financial institutions and industrial corporations since 1961. Over 6,000 banking, industrial, and government executives have participated in his seminars worldwide. A former Fulbright scholar, Dr. Chorafas is a graduate of the University of California, Los Angeles; the University of Paris; and the Technical University of Athens.


PART ONE: CHALLENGES OF LIABILITIES MANAGEMENT; 1 Market Bubble of Telecoms Stocks; Leveraging Makes the Global Financial Market Fragile; Credit Crunch Cripples Ambitions of Telephone Operators; Investment Banks Also Paid Dearly for Telephone Companies' Overexposure; Message from the Bubble in the Fall of 2000; Liquidity Crisis to Be Solved through Liability Management; 2 Downfall of Lucent Technologies, Xerox, and Dot-Coms; Has the New Economy Been Destabilized?; Market Falls Out of Favor with Tech Stocks: Apple Computer's Blues and the Dot-Coms; Lucent Technologies' Hangover; Downfall of Xerox; Shift from Real to Virtual Economy and the Challenge of the Service Industry; Financial Staying Power and Business Turf; 3 Liabilities and Derivatives Risk; Risk and Return Embedded into Derivatives Contracts; Why an Industrial Company Is Interested in Derivatives; Oil Derivatives and the Impact on the Price of Oil; Risks Taken by Intel, Microsoft, and the Financial Industry; Using Derivatives as a Tax Haven; Market Psychology: Wealth Effect and Reverse Wealth Effect; 4 Reputational and Operational Risk; Distinction between Ability to Perform and Willingness to Perform; Troubles Facing Certified Public Accountants in Connection; with Reputational Risk; Corruption and Mismanagement Underpin the Failure; to Control Operational Risk; Case Study on Operational Risk and Reputational Risk; With Orange County; Fallout from Operational Risk Hits Both the Fund and the Broker; Scandals Become Part of Reputational Risk When; They Come to the Public Eye; PART TWO: MANAGING LIABILITIES; 5 Assets, Liabilities, and the Balance Sheet; Aftermath of Liabilities: Nissan Mutual Life and General American; Earthquake after Liabilities Hit the Balance Sheet; Sensitivity Analysis, Value-Added Solutions, and Gap Analysis; Proper Recognition of Assets and Liabilities, and the Notion of Stress Testing; Redimensioning the Balance Sheet through Asset Disposal; Weight of Liabilities on a Company's Balance Sheet; 6 Virtual Balance Sheets and Real-Time Control; Virtual Financial Statements and Their Contribution to Management; Modeling of Assets and Liabilities Must Follow Rigorous Rules; Stress Scenarios Help to Reveal the Nature of Underlying Conditions; Forward-Looking Statements and Virtual Close at Cisco; Preparing a Real-time Report on Hedging and Exposure; From Virtual Balance Sheets to Finances of Virtual Corporations; Managing the Liabilities Accounts of Virtual Companies; 7 Liquidity Management and the Risk of Default; Liquid Assets and the Concept of Liquidity Analysis; Liquidity and Capital Resources: The View from Lucent Technologies; Who Is Responsible for Liquidity Management?; Unrealistic Assumptions Characterizing a Famous Model; Liquidity Ratios and Activity Ratios in the Service of Management; Computation of Leverage and Default Including Derivatives Exposure; Contingency Planning for Liquidity Management; 8 Market Liquidity and the Control of Risk; Different Types of Market Liquidity and Money Supply; Liquidity Risk, Volatility, and Financial Statistics.Marking to Market and Marking to Model; Liquidity Premium and the Control of Excess Liquidity; Maturity Ladder for Liquidity Management; The Role of Valuation Rules on an Institution's Liquidity Positions; PART THREE: CASH MANAGEMENT; 9 Cash, Cash Flow, and the Cash Budget; Basic Notions in Cash Management and the Cash Crunch; Cash Flow Studies and the Cash Budget; Flexible Budgeting and the Elaboration of Alternative Budgets; Benefits to Be Gained through Adequacy of Cash Figures; Cash Flow, Operating Cash Flow, and Free Cash Flow; Earnings, Cash Flow, and Price-to-Earnings Growth; Applying the Method of Intrinsic Value; 10 Cash on Hand, Other Assets, and Outstanding Liabilities; Handling Cash Flows and Analyzing the Liquidity of Assets; Art of Estimating Cash Flows from Liabilities; Changes in Loans Policies and Their Aftermath; Draining Cash Resources: The Case of Bank One; Establishing Internal Control and Performance Standards; 11 Money Markets, Yield Curves, and Money Rates; Money Market Instruments and Yield Volatility; Spillover Effects in the Transnational Economy; Major Factors Contributing to Global "Capital and Brains" Flows; Yield Structure and Yield Curves; Nominal Versus Real Interest Rates; Challenges Arising from the Use of Electronic Money; 12 Mismatched Risk Profiles and Control by the; Office of Thrift Supervision; Interest-Rate Risk Measurement and Office of Thrift Supervision Guidelines; Practical Example on the Role of Basis Points in Exposure; Sensitivity to Market Risk and Post-Shock Portfolio Value; Levels of Interest-Rate Risk and Quality of Risk Management; Sensitivity Measures and Limits on Dealing with Complex Securities; Tuning Examination Frequency to the Quality of an Institution.PART FOUR: CREDIT RISK, MARKET RISK, LEVERAGE, AND THE REGULATORS; 13 Credit Risk, Daewoo, and Technology Companies; Critical Factors in the Evaluation of Credit Risk; Bankruptcy of Daewoo; Cash Flows as Proxies of Expected and Unexpected Credit Risks; Developing and Implementing Prudential Limits; Taking Account of Management Quality in Establishing Credit Limits; Using Six Sigma to Study Deteriorating Credit Risk; Impact of the Internet on Credit Control; 14 Marking to Market and Marking to Model the Loans Book; Can the Loans Portfolio Be Marked to Market?; Using the Yield Curve as a Gateway to Sophisticated Solutions; Mismatch in Capital Requirements between; Commercial Banks and Investment Banks; Creative Accounting Damages the Process of Securitization; Securitization of Corporate Loans through Credit Derivatives ; 15 Changes in Credit Risk and Market Risk Policies; Art of Credit Risk and Market Risk Integration; Is It Wise to Have Distinct Credit Risk and Market Risk Organizations?; Calculating Capital Requirements for Credit Risk and Market Risk; Concentration of Credit Risk, Precommitment, and Eigenmodels ; Improving Capital Adequacy and Assessing Hedge Effectiveness ; 16 Summary: Management Blunders, Runaway Liabilities, and Technical Miscalculations Leading to Panics; Mounting Risk of Turning Assets into Runaway Liabilities; There Is No Way to Prognosticate the Aftermath of; Leveraging the Liabilities Side of the Balance Sheet; Throwing Money at the Problem Makes a Bad Situation Worse; Is Financial Contagion Spreading on a Global Scale?; Learning from Past Experience in Turning the Tide; How Has the New Economy Redefined the Nature and Framework of Risk?; The Destruction of the New Economy by Going Short in a Massive Way; Index

Product Details

  • publication date: 14/01/2002
  • ISBN13: 9780471106302
  • Format: Hardback
  • Number Of Pages: 336
  • ID: 9780471106302
  • weight: 815
  • ISBN10: 0471106305

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  • Saver Delivery: Yes
  • 1st Class Delivery: Yes
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