{"id":2238,"date":"2019-09-12T17:42:00","date_gmt":"2019-09-12T17:42:00","guid":{"rendered":"https:\/\/analystprep.com\/cfa-level-1-exam\/?p=2238"},"modified":"2026-03-10T17:31:38","modified_gmt":"2026-03-10T17:31:38","slug":"companys-net-daily-cash-position","status":"publish","type":"post","link":"https:\/\/analystprep.com\/cfa-level-1-exam\/corporate-finance\/companys-net-daily-cash-position\/","title":{"rendered":"A Company\u2019s Net Daily Cash Position"},"content":{"rendered":"\n<script type=\"application\/ld+json\">\n{\n  \"@context\": \"https:\/\/schema.org\",\n  \"@type\": \"QAPage\",\n  \"mainEntity\": {\n    \"@type\": \"Question\",\n    \"name\": \"Which of the following cash flows will have the effect of increasing or making more positive a company\u2019s daily cash position?\",\n    \"text\": \"Which of the following cash flows will have the effect of increasing or making more positive a company\u2019s daily cash position?\\n\\nA. Payables\\n\\nB. Maturing investments\\n\\nC. Debt repayment\",\n    \"answerCount\": 1,\n    \"acceptedAnswer\": {\n      \"@type\": \"Answer\",\n      \"text\": \"The correct answer is B.\\n\\nProceeds from maturing investments represent a cash inflow, which increases a company\u2019s net daily cash position.\\n\\nOptions A and C are incorrect because payables and debt repayment are cash outflows, which decrease a company\u2019s daily cash position.\"\n    }\n  }\n}\n<\/script>\n\n<script type=\"application\/ld+json\">\n{\n  \"@context\": \"https:\/\/schema.org\",\n  \"@type\": \"VideoObject\",\n  \"name\": \"Working Capital Management (2021 Level I CFA\u00ae Exam \u2013 Reading 35)\",\n  \"description\": \"This video lesson covers working capital management in corporate finance, focusing on managing cash, accounts receivable, accounts payable, and inventory. It explains liquidity sources, how to measure liquidity with ratios, short-term investment strategies, and funding options, all aimed at maximizing shareholder wealth through efficient working capital control.\",\n  \"uploadDate\": \"2018-10-25T00:00:00+00:00\",\n  \"thumbnailUrl\": \"https:\/\/img.youtube.com\/vi\/7ODf4zqxNxo\/hqdefault.jpg\",\n  \"contentUrl\": \"https:\/\/www.youtube.com\/watch?v=7ODf4zqxNxo\",\n  \"embedUrl\": \"https:\/\/www.youtube.com\/embed\/7ODf4zqxNxo\",\n  \"duration\": \"PT19M42S\"\n}\n<\/script>\n\n\n\n<iframe loading=\"lazy\" width=\"560\" height=\"315\" src=\"https:\/\/www.youtube.com\/embed\/7ODf4zqxNxo?si=6p2h2Nv9-eA5N74t\" title=\"YouTube video player\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe>\n\n\n\n<p>On a typical day, a company will have several instances of both cash outflows and cash inflows. These cash flows, however, do not offset each other and a company is left with a net cash position daily that can be either negative or positive.<\/p>\n\n\n\n<p>Managing a company\u2019s cash position is about taking steps to ensure that the net cash position is not negative at the end of each day. In managing the cash position, a company\u2019s treasury department usually gathers information from several sources and at several times during the day. It then uses this information to make decisions that aim to result in a net positive cash position at the end of the day.<\/p>\n\n\n\n<div style=\"margin:24px 0;\">\n  <a href=\"https:\/\/analystprep.com\/free-trial\/\"\n     target=\"_blank\"\n     rel=\"noopener noreferrer\"\n     style=\"\n       display:block;\n       width:100%;\n       text-align:center;\n       padding:16px 20px;\n       border:2px solid #2f5bff;\n       border-radius:50px;\n       background-color:#f5f7ff;\n       color:#2f5bff;\n       font-size:18px;\n       font-weight:500;\n       text-decoration:none;\n       line-height:1.3;\n     \">\n     Practice net daily cash position questions in our free trial.\n  <\/a>\n<\/div>\n\n\n<h2><strong>The Effect of Different Types of Cash Flows on the Net Daily Cash Position<\/strong><\/h2>\n<p>The greater the magnitude and frequency of cash inflows relative to cash outflows that a company has each day, the greater the likelihood that the company will have a positive net daily cash position.<\/p>\n<p>Typical cash inflows for a company include the following:<\/p>\n<ul>\n<li>Receipts from sales, operations, etc.;<\/li>\n<li>Fund transfers received from subsidiaries, joint ventures, and other third parties;<\/li>\n<li>Investment proceeds;<\/li>\n<li>Debt proceeds;<\/li>\n<li>Interest income;<\/li>\n<li>Tax refunds; and<\/li>\n<li>Other income.<\/li>\n<\/ul>\n<p>Typical cash outflows for a company include the following:<\/p>\n<ul>\n<li>Payments to suppliers;<\/li>\n<li>Salary disbursements;<\/li>\n<li>Other payables;<\/li>\n<li>Fund transfers to subsidiaries;<\/li>\n<li>Amount paid for investments<\/li>\n<li>Debt repayments;<\/li>\n<li>Interest expense;<\/li>\n<li>Dividend payments;<\/li>\n<li>Tax payments; and<\/li>\n<li>Other expenses.<\/li>\n<\/ul>\n<blockquote>\n<h2><strong>Question<\/strong><\/h2>\n<p>Which of the following cash flows will have the effect of increasing or making more positive a company\u2019s daily cash position?<\/p>\n<p>A. Payables<\/p>\n<p>B. Maturing investments<\/p>\n<p>C. Debt repayment<\/p>\n<p><strong>Solution<\/strong><\/p>\n<p>The correct answer is B.<\/p>\n<p>Proceeds from maturing investments represent a cash inflow, which has the effect of increasing a company\u2019s net daily cash position.<\/p>\n<p>Options A and B are incorrect. Payables and debt repayment, on the other hand, are cash outflows which will have the opposite effect.<\/p>\n<\/blockquote>\n<p><em>Reading 35 LOS 35d:<\/em><\/p>\n<p><em>Describe how different types of cash flows affect a company\u2019s net daily cash position<\/em><\/p>\n<div class=\"notes_inv\">\n<hr \/>\n<p><a href=\"https:\/\/analystprep.com\/cfa-level-1-exam\/corporate-finance\/learning-sessions-curriculum-corporate-finance\/\"><em>Corporate Finance &#8211; Learning Sessions<\/em><\/a><\/p>\n<\/div>\n\n\n<div style=\"text-align:center;margin:50px 0 30px;\">\n\n  <a href=\"https:\/\/analystprep.com\/free-trial\/\"\n     target=\"_blank\"\n     rel=\"noopener noreferrer\"\n     style=\"\n       display:inline-block;\n       padding:14px 34px;\n       background:linear-gradient(135deg,#4a74d1,#3b66c4);\n       color:#ffffff;\n       font-size:18px;\n       font-weight:600;\n       text-decoration:none;\n       border-radius:50px;\n       box-shadow:0 6px 18px rgba(59,102,196,0.25);\n     \">\n     Start Free Trial\n  <\/a>\n\n  <p style=\"\n       margin:18px auto 0;\n       max-width:620px;\n       font-size:16px;\n       line-height:1.6;\n       color:#333333;\n     \">\n     Strengthen your understanding of corporate cash management and liquidity analysis with CFA Level I exam-style practice questions.\n  <\/p>\n\n<\/div>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>On a typical day, a company will have several instances of both cash outflows and cash inflows. These cash flows, however, do not offset each other and a company is left with a net cash position daily that can be&#8230;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[6],"tags":[],"class_list":["post-2238","post","type-post","status-publish","format-standard","hentry","category-corporate-finance","blog-post","no-post-thumbnail","animate"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.9 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Net Daily Cash Position &amp; Cash Flow | CFA Level 1<\/title>\n<meta name=\"description\" content=\"Understand a company&#039;s daily cash flow and how it results in a net cash position. 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