What is the goal of a company treasury group?

• A. To maximize profits
• B. To manage risk
• C. To minimize cash flow
• D. To achieve the lowest overall cost of funds

Answer: (D)

The treasury function aims to secure the company’s funding at the lowest possible cost while ensuring there is enough liquidity to meet obligations and manage funding risk. Financing costs directly affect interest expense and cash flow, so lowering those costs improves profitability and enterprise value. While risk management and maintaining liquidity are important, they serve the goal of keeping financing costs favorable and stable. Maximizing profits from operations is broader than treasury’s scope, and minimizing cash flow would jeopardize the company’s ability to pay its obligations. Therefore, the most appropriate objective is achieving the lowest overall cost of funds, through optimizing the funding mix, access to diverse sources, favorable terms, and effective hedging against interest rate and liquidity risks.