Question

Which of the following is an advantage for multinationals of using centralized control in treasury operations?

A) Limited access to real-time financial information

B) Enhanced responsiveness to local market conditions

C) Efficient cash management and reduced redundancy

D) Increased complexity in managing diverse financial instruments

Answer 1

Centralized control in treasury operations allows multinationals to manage their finances more efficiently, with less redundancy and better visibility over cash flows.

Step-by-step explanation:

An advantage for multinationals of using centralized control in treasury operations is efficient cash management and reduced redundancy. Option C) Efficient cash management and reduced redundancy is correct because centralization allows for a more streamlined process in managing finances, which leads to fewer duplicate efforts across various departments or regions. Moreover, having a centralized treasury can lead to better visibility over cash flows, enabling optimized liquidity management and cost savings related to foreign exchange exposure and inter-company funding.