MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Page one
Dirk Kaiser
Treasury Management
Lessons in Finance and Investment at
Masarykova univerzita
Ekonomicko-správní fakulta
Fall Term 2007/2008
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Short CV
Prof. Dr. Dirk Kaiser
Short CV
1962 Born in Krefeld , Germany
1983 -
1989
UNIVERSITY OF BONN
(studies in economics, diploma - the equivalent being a master's degree)
1989 -
1994
UNIVERSITY FOR DISTANCE TEACHING, HAGEN (assistant at the chair of banking &
finance; dissertation, doctorate ­ the equivalent being a ,,Ph. D.")
1994 1996
Participations department of a bank in Düsseldorf
1996 Visiting lecturer at PORTLAND STATE UNIVERSITY, Oregon, USA
1996 1999
Director of the participations department of a tour operator in Düsseldorf
1999 2002
Director of the central mandate services department of a bank in Düsseldorf
since
2002
Professor for financial management, banks and insurances at
FACHHOCHSCHULE BOCHUM UNIVERSITY OF APPLIED SCIENCES
http://www.fh-bochum.de/fbw/personen/kaiser.html
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Consultancy hours
Prof. Dr. Dirk Kaiser
Fall term 2007 / 2008
Consultancy hours
Tuesday, 6 p.m to 7.30 p.m.
1)Room AW 5-17
2)dirk.kaiser@fh-bochum.de
3)+49 (234) 32-10604
FH Bochum 120 Finanzwirtschaft
Prof. Dr. Dirk Kaiser References
Treasury Management
Recommended Reading and Further References
(recommended reading)
Brealey, R. A. / Myers, S. C. / Allen, F. Principals of Corporate Finance, 8th
Edition,
New York: McGraw-Hill/Irwin (2006).
Bodie, Z. / Kane, A. / Marcus, A. J. Essentials of Investments, 5th
Edition. New York:
McGraw-Hill/Irwin (2004).
(further references in English)
Copeland, T. E. / Weston, J. F. / Shastri, K. Financial Theory and Corporate Policy, 4th
edition,
Boston et al.: Pearson/Addison-Wesley
(2005)
Feibel, B. J. Investment Performance Measurement, New
York: Wiley (2003).
(only for participants who are interested in an additional German textbook)
Kaiser, D. Treasury Management ­ betriebswirtschaftliche
Finanzierungs- und Investitionslehre ganzheitlich
und praxisnah, Wiesbaden: Gabler (2008).
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Trilingual index
Trilingual index
EnglishEnglishEnglishEnglish----GermanGermanGermanGerman----CzechCzechCzechCzech index ofindex ofindex ofindex of
key termskey termskey termskey terms in financein financein financein finance
EnglishEnglishEnglishEnglish GermanGermanGermanGerman CzechCzechCzechCzech
ability to pay Zahlungsfähigkeit platební schopnost
Any volAny volAny volAny voluuuunnnnteers?teers?teers?teers?
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Slides
Treasury Management
Slides
FH Bochum 120 Finanzwirtschaft
Prof. Dr. Dirk Kaiser References
Treasury Management
Recommended Reading and Further References
(recommended reading)
Brealey, R. A. / Myers, S. C. / Allen, F. Principals of Corporate Finance, 8th
Edition, New
York: McGraw-Hill/Irwin (2006).
Bodie, Z. / Kane, A. / Marcus, A. J. Essentials of Investments, 5th
Edition. New York:
McGraw-Hill/Irwin (2004).
(further references in English)
Copeland, T. E. / Weston, J. F. / Shastri, K. Financial Theory and Corporate Policy, 4th
edition, Boston et al.: Pearson/Addison-Wesley
(2005)
Feibel, B. J. Investment Performance Measurement, New
York: Wiley (2003).
(only for participants who are interested in an additional German textbook)
Kaiser, D. Treasury Management ­ betriebswirtschaftliche
Finanzierungs- und Investitionslehre ganzheitlich
und praxisnah, Wiesbaden: Gabler (2008).
At disposal?At disposal?At disposal?At disposal?
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Survey
Treasury Management
Survey
1 Basics (units 1­5, 10)
2 Cash flow from financial activities (units 6-8)
3 Cash flow from operations (unit 9)
4 Cash flow from investment activities (units 11-16)
* Dominance
* Complete account of an investment
* Net present value
* Equivalent annuity
* Internal rate of return
* Payback period
3 CFs
6 Ds
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Test
Treasury Management
Test
When? Monday, February 11, 2008
Where? MU ESF, S 8
How long? 60 minutes in total
Exercise 1 Finance (reproductive)
Exercise 2 Finance (transfer)
Exercise 3 Investment calculus (reproductive)
Exercise 4 Investment calculus (transfer)
Relevant is all what we have done in class, but nothing else.
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Exchange and money
Treasury Management
Why?
1. Exchange 2. Money
FINANCE,
INVESTMENT
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Exchange and money
Preconditions of a
Market Economy (Fig. 1-1)
market economy
given
multiple
wants
given
are not are
(=exchange economy)
allocation of ressources
via directive
Robinson
economy
are allowed to
be realized
are
ignored
Walter Eucken, 18911950:
Ordoliberalism
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Exchange and money
Timely Patterns of
Exchange Contracts (Fig. 1-3)
t=0 t=2
spot contract
financial
contract
forward
signing
consideration
quid pro quo
signing
contract
quid pro quo
consideration
signing
quid pro quo
consideration
pacta sunt sepacta sunt sepacta sunt sepacta sunt serrrrvandavandavandavanda
(R(R(R(Roman law vs.oman law vs.oman law vs.oman law vs.
cocococommmmmon law)mon law)mon law)mon law)
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Exchange and money
Exercise 1-1
Candice and Quentin find themselves in a simple exchange
economy that is mostly equivalent to the one depicted in
figure 1-3. In particular, two points in time (i.e.: t=0 and
t=2) are at their disposal for signing, consideration and
quid pro quo. However, Candice and Quentin are now allowed
to sign exchange contracts not only in the present
(t=0, early contracting), but also in the future (t=2, late
contracting). To be sure, in both cases the signing has to
take place until any goods or services are exchanged.
Find out the additional timely pattern(s) for exchange contracts
that are induced by this weaker catalogue of assump-
tions!
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Exchange and money
Exercise 2-1
Candice and Quentin again find themselves in the simple
market economy known from exercise 1-1 providing for
two points in time (t=0 and t=2) and allowing for early and
late ex ante contracting. In addition, both have agreed to
introduce money as the generally accepted medium of exchange.
In t=2, Quentin proposes to Candice a late spot
contract providing for Candice to deliver one kilogram of
marzipan and Quentin to pay CZK 1,000,000,000.
A good deal from Candice's perspective?
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Exchange and money
The Functions of Money (Mn. 10)
1) Medium of exchange
2) Store of value
3) Unit of account
4) Legal tender etc.
Correct?
Complete?
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Exchange and money
In the Year 1946...
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Exchange and money
Patterns of Money Usage (Fig. 2-1)
t=0 t=2
PMU 1: pattern of money usage 1
("goods / services versus money")
PMU 2: pattern of money usage 2
("money vs. money")
forward contract
(PMU 1)
signing
consideration
quid pro quo
signing
spot contract
financial
(PMU 2)
(PMU 1)
contract
quid pro quo
consideration
signing
quid pro quo
consideration
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Exchange and money
Exercise 2-2
The only good currently traded between Candice and
Quentin is marzipan. Both want to express changes in
their individual marzipan stocks by means of the letter m,
changes in their individual money stocks by means of e.
Furthermore, both have agreed to represent a spot contract
by means of the three-letter code SpC, a financial
contract by means of FiC and a forward contract by
means of FoC. Changes in their individual stocks of
money and marzipan as well as contracts are to be indexed
by 2,0=t in order to point out their timely dimension.
Express the contractual patterns from exercise 1-1 by using
the aforementioned symbols!
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Exchange and money
Liquidity
t=0 t=1 t=2
contracting revision
information
initial
update
informational
John Maynard Keynes
(1883-1946)
Money is liquidity.
H. G. Moulton, 1918
,,Liquidity is tantamount to shiftabilty."
Austrian paradigm of informational updates
and revisions of decisions
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Exchange and money
Ability to Pay
Ability to pay all economic
financial obligations
Ability to cover all legal
financial obligations
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Monetary stocks and flows 1
Stock-Flow Equation
initial stock
- cumulated outflows
+ cumulated inflows
= final stock
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Monetary stocks and flows 1
Exercise 3-1
Candice and Quentin have found an internship with Masarykovy
pivovar a.s. (MP). Quentin is assessing the amounts of hop,
malt and water coming in as well as the amount of beer leaving
the brewery. Candice is driving the company's delivery truck in
order to provide the local pubs with MP's famous lager. At the
beginning of the 27th
week of the year at 7:00 a.m. when they
both clock in, 500 hectoliters of lager are in the container. During
the week, Candice shows up 8 times with the truck, each
time pumping off 20 hectoliters. On Tuesday, sladek Vaclav
adds 300 hectoliters of fresh lager to the container.
What is the amount of beer in the container that Quentin will report
to the company's controlling department on Friday at 3:45
p.m.?
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Monetary stocks and flows 1
Monetary Stocks
money = cash (bills and coins)
("cash &  balances of bank accounts payable /
cash equivalents") receivable on demand
net financial assets = money
+ other financial claims
- other financial obligations
(except for equity)
net assets (equity) = net financial assets
+ non-financial assets
net operating assets
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Monetary stocks and flows 1
Monetary flows:
Schmalenbach's Bar Graph (Fig. 3-1)
(1) (2) (3)
Financial accounting
(4) (5) (6)
(7) (8) (9)
Management accountingCost
Revenues
Incoming payments
Receipts
Income
Outgoing payments
Expenditures
Expenses
Eugen Schmalenbach,
1873-1955
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Monetary stocks and flows 1
Exercise 3-2
During its financial year 2025, the Brnnské Marcipánové a
Nugátové Kontor s.r.o. ("the company") has among others registered
the transactions (1) to (6) as described underneath.
Make up a three-column table and point out by means of this table
to what extent these transactions have induced
- incoming payments (+) or outgoing payments (-),
- receipts (+) or expenditures (-),
- income (+) or expenses (-).
(1) The Jemná Čokoláda a.s. makes a money transfer to the company's
current account amounting to CZK 6,500 for crude chocolate that was
purchased on credit last year.
(2) Marzipan recorded at a book value of CZK 8,000 is sold for CZK
10,000 by the company. CZK 5,000 are paid instantaneously by the
Jemná Čokoláda a.s. in cash, the remainder is purchased on credit.
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Monetary stocks and flows 1
(3) Magda Pavlová, one of the company's apprentices, is sent to Brnnská
Spořitelná with CZK 1,365.75 in cash in order to deposit the money
with the company's current account.
(4) Pablo Guerrero, a promising artist, transfers rent for his studio on the
company's premises at the amount of CZK 1,200 covering the period
from November 1, 2025, to October 31, 2026, to the company's current
account.
(5) By means of a letter dated February 1, 2025, Brnnská věcná pojišťovna
a.s. recognises a damage caused by a fire in 2024 amounting to
CZK 7,200. The money transfer to the company's current account,
however, will take some time.
(6) In 2025, a second fire destroys chocolate coating at a book value of
CZK 1,800. The causes of the fire will supposedly be clarified in January
2026. Until that date, Brnnská věcná pojišťovna a.s. once more
does not recognise the damage.
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Monetary stocks and flows 2
Three Companies from Brno
(Case Studies I-III, Tab. 3-1)
Cool, Fit & Partners Brnnské Marcipánové a
Nugátové Kontor
Jemná Čokoláda
Legal form v.o.s. s.r.o. a.s.
Date of formation January 1, 2025 September 1, 1873 July 1, 2025
Company purpose Consulting; wholesale in personal
computers
Wholesale in raw materials for the
production of sweets
Production and sale of sweets
Slogan ,,Stay cool ­
call the consultant"
,,Raw materials for sweet producers
- just in time"
,,Not a day without chokolate!"
Domicile Brno Brno Brno
Shareholders as of
Dec. 31, 2025
Peter Cool (70%), Jane Fit (25%),
Johnny B. Good (5%); all from Brno
Jiří Pátek (50%), Tomáš Pátek (50%),
both from Brno
Všeobecný potraviny a.s.,
České Budějovice (100%)
Employees 5 15 150
Main bank relation;
line of credit
Brněnská spořitelna
(CZK 50,000)
Poštovní spořitelna
(CZK 300,000)
Živnostenská spořitelna
(CZK 1,000,000)
Further
legal information
o Daddy Cool has guaranteed Brněnská
spořitelna's loan
o Mortgage on the company building
in favour of Brněnská spořitelna
o Faktorfinancování Ceská republika
a.s. has entered an agreement with
CFP on the continous purchase of accounts
receivable up to CZK 100,000
against security cession of all A/R's
o Pavel Sladký, managing director
of the kontor, is member of the
board of directors of Jemná
Čokoláda
o Kontor is delivering against reservation
of proprietory rights
and in places against additional
acceptance of a bill of exchange.
o Legally binding letter of comfort of
sole shareholder in favour of Jemná
Čokoláda
o The board of directors has adopted
rules of procedures for the officers
of the company providing among
other things that certain actions require
BoD-approval.
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Monetary stocks and flows 2
Cool, Fit & Partners
Balance Sheets (Tab. 3-2, 4-3)
Assets CFP v.o.s., Balance Sheet as of January 01, 2025
TCZK
Fixed assets Equity
Property, plant Equity Cool
Equipment Equity Fit
Current assets Debt
Merchandise Bank loan
Current account
Total assets Total liabilities
50
150
700
700
70
Liabilities
200
900
500
400
300
200
330
900
Assets CFP v.o.s., Balance Sheet as of December 31, 2025
before profit distribution, TCZK
Fixed assets Equity
Property, plant Equity Cool
Equipment Equity Fit
Financial assets 1 Equity Good
Financial assets 2 Profit
Current assets Debt
Merchandise Bank loan
Accounts receivable Accounts payable
Term account
Current account
Cash
Total assets Total liabilities
10
10
960
550
410
10
297
223
205
175
10
20
Liabilities
300
50
20
130
100
650
660
10
960
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Monetary stocks and flows 2
Brnnské Marcipánové a
Nugátové Kontor
Income Statement (Tab. 4-1)
2025 2024
1. Revenues 210 260
2. Changes in inventories of finished goods and work in progress 20 -10
3. Production for own fixed assets capitalized 6 4
4. Other operating income 16 2
5. Cost of purchased materials and services 142 151
6. Personnel expenses 42 31
7. Depreciation and amortization on tangible and intangible assets 38 42
8. Other operating expenses 10 4
9. Income from participations 2 2
10. Income from other financial assets 2 2
11. Other interest income 4 3
12. Depreciation and amortization on financial assets and financial current assets 0 2
13. Interest expenses 12 10
14. Profit before tax 16 23
15. Income tax 6 12
16. Other taxes 2 2
17. Net income / loss 8 9
Income statement for the Brn?nské Marcipánové a Nugátové Kontor, Brno, for the time period from
January 01, 2025, to December 31, 2025 (CZK mio)
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Monetary stocks and flows 2
Liquidity Reserves
Examples
* Term deposits
* Certificates of deposit
* Commercial paper
* Bonds
* Shares in investment funds
* Ordinary and preference shares
* Participation certificates
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Monetary stocks and flows 2
Potential Liquid Assets
Examples
* Guarantee (or surety)
* Letter of comfort (if legally binding)
* Liquid assets of a full partner
(general partner) or of a limited
partner who has not yet paid in
his capital completely
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Monetary stocks and flows 2
Protecting the
Company's Ability
to Pay (Fig. 3-3)
Financial
obligations !
Financial
obligations!
PLA
LR
MoneyAbility to
pay
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Cash flow statement 1
Exercise 3-3
In addition to tables 3-1, 3-2 and 4-3, here is further information concerning
CFP:
* The shares of the Pazourek kamenolom a.s. (financial assets 1) and the
Terra nostra pekarna a.s. (financial assets 2) are listed on the stock exchange;
as of December 31, 2025, the quotations are 130% and 120%,
respectively, over book value.
* The termination period remaining of the term account as of December
31, 2025, is 120 days.
* Private wealth of Peter Cool after contribution of his capital amounts to
CZK 500,000; CZK 100,000 can be considered as liquid. For Jane Fit,
the corresponding amounts are CZK 400,000 and CZK 200,000, respectively,
for Johnny B. Good, CZK 100,000 and CZK 50,000, respectively.
* Daddy Cooľs attitude towards the project of his son and his son's
friends has become critical.
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Cash flow statement 1
i) Determine the amounts of CFP's money stock, financial assets, nonfinancial
assets and net assets!
ii) As of December 31, 2025: Which assets might be taken into consideration
as liquidity reserves, which ones as potential liquid assets? Which
amounts will the Treasury of the company most probably attribute to
LR and PLA, respectively?
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Cash flow statement 1
Structuring the
Production Factors: Classical and
for Management Purposes (Fig. 4-1)
economics Science
Land
Capital
Labor
Fixed
assets
Labor
Management
Classical
Other
other
Management
Adam Smith, 1723-1790
David Ricardo, 1773-1823
Erich Gutenberg,
1897-1984
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Cash flow statement 1
Constructing the Money Cycle
Step 1
OF
OM
OL
Factor
markets
Money cycle
Company
M0 M1
Operations
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Cash flow statement 1
Constructing the Money Cycle
Step 2
OF
OM IS
OL
Output
markets
Factor
markets
Money cycle
Company
M0 M1
Operations
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Cash flow statement 1
Primary and
Secondary Markets (Fig. 4-2)
Definition 4-1
a) PRIMARY MARKETS are markets where exchange contracts are
signed (t=0) and where they are by means of consideration and
quid pro quo (t=0 and t=2) fulfilled.
b) SECONDARY MARKETS are markets where exchange contracts that
were signed already, but that are not yet completely fulfilled, are
traded in the meantime (t=1).
of the
financial contract
financial contract:
timet=0 t=1 t=2
financial contract:
intermediary trading
consideration
signing, quid pro quo
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Cash flow statement 1
Constructing the Money Cycle
Step 3
OF
OM IS
OL
IE OP OW ID OI OR
Output
markets
Factor
markets
Financial markets
Money cycle
Company
M0 M1
Operations
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Cash flow statement 1
Exercise 4-1
Candice (like "consideration") and Quentin (like "quid pro quo")
would both like to sign a financial contract; formally speaking:
( )2000 ,eeFiCFiC = . Both have agreed on an ordinary debt contract.
Still in t=0, Candice pays the consideration amounting to CZK 10,000
to Quentin, so that from her point of view the following is valid:
[ ]CZKeCandice
00.000,100 -= . The debt contract obliges Quentin to the
following payments in t=2: (1) redemption of the consideration at
face value; (2) a fixed interest rate amounting to 068.0=Dr per period
(interest formally due in t=1 has to be capitalized).
i) What is the amount due to Candice in t=2?
ii) Now imagine it had not been Quentin but the Cool, Fit & Partners
v.o.s. (CFP) that had received the consideration of this financial
contract. Assume CFP's perspective and "translate" the contract
into the language of the money cycle!
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Cash flow statement 1
Exercise 4-2
Starting point is the debt contract from exercise 4-1. Due to new information,
Candice finds herself in a state of increased demand for
for money in t=1. For this reason, she revises her initial decision and
sells the contract for an instant payment of CZK 10,720.15 in t=1 to a
third party.
i) Associate the contractual actions described above with the concepts
of primary market and secondary market!
ii) Express the secondary trading described above by means of the
symbols known to you from exercise 2-2!
iii) What is the current interest rate on the secondary market in t=1?
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Cash flow statement 1
Constructing the Money Cycle
Step 4
OF
OM IS
OL
OT
IE OP OW ID OI OR
Output
markets
Factor
markets
Financial markets
State
Money cycle
Company
M0 M1
Operations
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Cash flow statement 1
Ops and Money Cycle (Fig. 4-3)
OF
OM IS
OL
IO
OT OO
IE OP OW ID OI OR
Output
markets
Factor
markets
Financial markets
State Other items
Money cycle
Company
M0 M1
Operations
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Cash flow statement 2
Application of the
Stock-Flow Equation
Initial stock of money M0
 Incoming / outgoing payments
factor markets
+IF-OF-OM-OL
+ Incoming payments
output markets
+IS
 Incoming / outgoing payments
other items
+IO-OO
 Incoming / outgoing payments
financial markets
+IE-OP-OW+ID-OI-OR
-OE+IP+IW-OD+II+IR
- Taxes -OT
= Final stock of money M1
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Cash flow statement 2
Theoretical
Cash Flow Statement
CF from operating activities +IS+IO-OM-OL-OO-OT
("Internal funding")
+ CF from investing activities -OF+IF-OE+IP+IW
("Investments") -OD+II+IR
+ CF from financing activities +IE-OP-OW+ID-OI-OR
("External funding")
= Net increase / decrease in =M1-M0
money stock
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Cash flow statement 2
Exercise 4-4
The Cool, Fit & Partners v.o.s. (CFP) has in 2006 encountered
the subsequent transactions:
(1) With the intent of a longlasting investment, shares of the Flintstone
kamenolom a.s. amounting to CZK 10,000 as well as shares of the Terra
nostra pekarna a.s. amounting to CZK 20,000 are bought against money
transfer from the company's current account.
(2) Because of not being in use anymore, pneumatic post equipment is sold
to a museum at its book value of CZK 25,000 against payment in cash.
(3) Personal computers (merchandise) invoiced at CZK 75,000 are delivered
to CFP.  25,000 are paid in cash. Another CZK 40,000 are settled by
money transfer from the company's current account. The remainder is
covered by the use of commercial credit.
(4) As of July 1, Johnny B. Good joins the company as third general partner.
He deposits his share capital amounting to  20,000 in cash.
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Cash flow statement 2
(5) As of July 1, Peter Cool withdraws CZK 10,000 of his capital
against receival of an equivalent amount from the company's cash.
(6) CFP invoices CZK 40,000 for consultancy services rendered in connection
with the foundation of Jemná Čokoláda a.s. and receives the corresponding
amount on the company's current account.
(7) CFP invoices CZK 10,000 for consultancy services rendered to university
absolvents at the occasion of a graduate recruitment fair. The organiser
of the fair transfers the corresponding amount to the current
account of the company.
(8) Rent for a part of the company building used by third parties amounting
to CZK 20,000 becomes due and is transferred to the company's
current account.
(9) Personal computers (merchandise) debited with CZK 400,000 are sold
for CZK 650,000. CZK 475,000 of the amount due are received on the
company's current account. For the coverage of the remaining CZK
175,000, commercial credit is extended to the customer.
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Cash flow statement 2
(10)New personal computers (merchandise) invoiced at
CZK 200,000 as well as equipment invoiced at CZK 50,000 are bought
against money transfer from the company's current account.
(11)On November 1, 2025, a term deposit with a maturity of 180 days
amounting to CZK 10,000 is credited from the company's current ac-
count.
(12)Salaries amounting to CZK 180,000 in total are transferred to the employees'
current accounts.
(13)Interest due amounting to CZK 35,000 in connection with a bank loan is
credited from the company's current account.
(14)Redemption due amounting to CZK 50,000 is covered by money transfer
from the company's current accunt.
(15)In order to prepare for the closing of the annual accounts, fixed assets
are written off as follows: property, plant: CZK 3,000; equipment: CZK
2,000.
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Cash flow statement 2
(i) Make up a three-column table and point out by means of
this table to what extent these transactions have induced
- incoming payments (+) or outgoing payments (-),
- receipts (+) or expenditures (-),
- income (+) or expenses (-).
(ii) "Translate" the 15 CFP-transactions into the language of
the money cycle"
(iii) Make up CFP's theoretical cash flow statement for the financial
year 2025!
(iv) Compare CFP's theoretical cash flow statement to a cash
flow statement according to IAS/IFRS!
MU ESF Brno / FH Bochum
Prof. Dr. Dirk Kaiser
Example for a Cash
Flow Statement according
to IAS/IFRS (here: Metro Group)
2006 2005
EBIT 1.983 1.738
Depreciation and amortization of tangible and intangible assets 1.250 1.200
Change in provisions for pensions and other provisions 273 -19
Change in net working capital 1.137 66
Income taxes paid -543 -499
Elimination of negative difference first-time consolidation -410 0
Other -427 -452
Cash flow from operating activities of continuing operations 3.263 2.034
Cash flow from operating activities of discontinued operations 0 150
Total cash flow from operating activities (+IS+IO-OM-OL-OO-OT) 3.263 2.184
First-time consolidation 108 19
Company acquisitions -205 0
Investments in tangible assets (excl. Finance leases) -1.824 -1.922
Other investments -268 -253
Company divestments 0 48
Divestment of stores 484 670
Disposals of fixed assets 403 313
Cash flow from investing activities of continuing operations -1.302 -1.125
Cash flow from investing activities of discontinued operations 0 -43
Total cash flow from investing activities -OF+IF-OE+IP+IW-OD+IF+IR -1.302 -1.168
Profit distribution
- to parent company stockholders -334 -334
- to other stockholders -122 -72
Raising of financial liabilities 1.423 935
Redemption/repayment of financial liabilities -1.571 -1.415
Interest paid -610 -637
Interest received 169 137
Profit and loss transfers and other financing activities 50 -6
Cash flow from financing activities of continuing operations -995 -1.392
Cash flow from financing activities of discontinued operations 23
Total cash flow from financing activities +IE-OP-OW+ID-OI-OR -995 -1.369
Total cash flows 966 -353
Exchange rate effects on cash and cash equivalents -1 13
Overal change in cash and cash equivalents 965 -340
Cash and cash equivalents on January 1 M0 1.767 2.107
Cash and cash equivalets on December 31 M1 2.732 1.767
Consolidated cash flow statement ( million)
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser Cash flow statement 2
Bar Graph plus Money Cycle
Financial accounting
(1) (2) (3)
(4) (5) (6)
(7) (8) (9)
Management accountingRevenue & cost
Incoming & outgoing payments
Receipts & expenditures
Income & expenses
OF
OM IS
OL
IO
OT OO
IE OP OW ID OI OR
Output
markets
Factor
markets
Financial markets
State Other items
Money cycle
Company
M0 M1
Operations
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser CF from financial activities 1
Uncertainty vs. Risk
FRANK KNIGHT (1885-1972):
Risk, Uncertainty,
and Profit (1921)
Uncertainty in the
broader sense
,,True" uncertainty,
"unmeasurable uncertainty"
(the distribution is not known)
,,risk" proper,
,,measurable uncertainty"
(the distribution is known)
GEORGE L. S. SHACKLE (1967):
The Years of High Theory
(1926 ­ 1939)
The Century of Decision Theory
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser CF from financial activities 1
Financial Risks
RISK CAUSED BY TIMELY DEVELOPMENT
(In finance: Risk that is caused by timely differences
between consideration and quid pro quo.)
RISK CAUSED BY LACK OF INFORMATION
(But: How much information is possible?
Borderline to risk caused by timely development
is difficult to determine.)
i
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser CF from financial activities 1
Covenants
Examples
* Admission to the circle of
MIS addressees
* Transfer of property rights
* Mortgage
* Chattel mortgage
* Security cession
* Guarantee (or surety)
* Letter of comfort
(if legally binding)
Additional risk
caused by timely
development
Financial contracts
can be expected to
be more complex.
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser CF from financial activities 1
Exercise 6-3
Consider the three companies from Brno as presented
in the preceding slides.
Explore the information available for regulations
that could serve as covenants in financial contracts!
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser CF from financial activities 1
Emission Finance
 Financial contracts that comply with
all of the three subsequent criteria:
certified as a security
fungible (homogeneous, ISIN)
sufficient free float
If at least one of these additional criteria is not fulfilled,
it is STANDARD FINANCE.
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser CF from financial activities 1
Exercise 6-4a
Consider the subsequent financial instruments:
* shares in the Cool, Fit & Partners v.o.s.
* shares in the Brnnské Marcipánové a
Nugátové Kontor s.r.o.
* shares in the Jemná Čokoláda a.s.
* bonds issued by the Brnnské Marcipánové a
Nugátové Kontor s.r.o.
* participation certificates issued by the Cool, Fit &
Partners v.o.s.
* bills of exchange
Which of these instruments could basically be used for emission
finance?
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser CF from financial activities 2
Secondary Market Liquidity:
The Stock Exchange
secondary market
financial contracts financial contracts
floating of final redemption of
trading
of securities
emission finance:
timet=0 t=1 t=2
emission finance:
Emission finance is a
necessary, but not a
sufficient condition for
secondary market trading
of the contracts on the
stock exchange.
A listing requires an
admission.
In finance, stock exchanges are usually
publicly chartered and
highly organised
secondary markets for emission finance.
(With regard to forward contracts, stock exchanges
may also serve as primary markets.)
A listing on the stock
exchange increases the
secondary market liquidity
of emission finance.
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser CF from financial activities 2
Initial Public Offering
(IPO; Going Public))
possible variations: intermediate
securitization, application for ISIN,
or floating
t=1
share
price
"underpricing"
t=1
first listing of the
company on the
stock exchange
from several days to many years
t=0 t=2 time
of the shares
necessarily: emission)
origination (not
timet=0 t=2
Difference between first quotation
and emission price: ,,underpricing"
(common scenario)
Possible: (i) delay between origination
and securitization etc.; (ii)
delay between securitization etc.
and first listing
An Initial Public Offering (,,IPO" in short,
very often also called "Going Public") is the
first listing of the shares of a certain company
on the stock exchange.
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser CF from financial activities 2
Exercise 6-5
After the formation of the Jemná Čokoláda a.s. on
July 1, 2025, its sole shareholder, the Všeobecný
potraviny a.s., has induced its subsidiary to securitize
its shares and apply for an International Securities
Identification Number. After successful
completion, the floating of 40% of the share capital
was put into practice on February 1, 2030. The
Initial Public Offering took place on February 4,
2030.
Analyze the financial effects of this IPO on the
Jemná Čokoláda a.s.!
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser CF from financial activities 2
Debt and Equity
Maturity
(DE-criterion 1)
Property rights
(DE-criterion 2)
Repayment of
consideration
(DE-criterion 3)
Further
repayments
(DE-criterion 4)
Legal status in
insolvency
(DE-criterion 5)
Pure
Equity
Mezzanine
Finance
Pure
Debt
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser CF from financial activities 2
Exercise 6-7
i) Make up a debt-equity-profile of preference shares
according to the five aforementioned criteria!
ii) Subdivide the subsequent financial contracts into
debt and equity according to the legal status in in-
solvency:
* preference share
* ordinary share
* partner in a v.o.s.
* silent partner
* participation certificate
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser CF from financial activities 2
Exercise 6-8
For the short fiscal year 2025, the Jemná Čokoláda a.s. reports the
subsequent data:
incoming payment (+)
outgoing payment (-)
income (+)
expenses (-)
(1) sales +1,500 +1,500
(2) materials -800 -800
(3) wages -200 -200
(4) taxes -100 -100
(5) issuance of participation certificates +10 0
(6) admission of a silent partner +1 0
(7) issuance of preference shares +11 0
(8) interest -50 -50
(9) profit distribution -340 0
(10) depreciation and write-off 0 -60
(11) appreciation 0 +20
(12) formation of provisions for bad debts 0 -30
Total 32 280
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser CF from financial activities 2
i) Make up Jemná Čokoláda's theoretical cash flow statement
for the short fiscal year 2025!
ii) Classify the amount of money that Jemná Čokoláda has in the
short fiscal year 2025 generated by financial activities by
means of a two-column two-rows matrix with the two rows
standing for standard and emission finance, respectively, and
the two rows for equity and debt, respectively!
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser CF from financial activities 2
Entrepreneurship, Equity and
the Life-Cycle of a Company (Fig. 6-6)
Dissolution
Insolvency
Equity
New company
Going Concern
by integration of
new shareholders
Formation
Increase in capital
by further contribution made by
old shareholders
Joseph A. Schumpeter,
February 08, 1883 (Třešť)
January 08, 1950 (Taconic)
Joel Dean, 1906-1979
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser CF from financial activities 3
Some More Famous Scientists
Born in Bohemia or Moravia
Kurt Gödel, Logician,
April 28, 1906 (Brno)
 January 14, 1978 (Princeton)
Gregor Mendel, Biologist,
July 22, 1822 (Vražné-Hynčice)
 January 06, 1884 (Brno)
Karel Engliš, Economist,
August 17, 1880 (Hrabyně)
 June 15, 1961 (Hrabyně)
Ota Šik, Economist,
September 11, 1919 (Plzeň)
 August 22, 2004 (Sankt Gallen)
Three economists
to rediscover!?
Josef Macek, Economist,
September 13, 1887 (Krumpach u Zábřehu)
 February 19, 1972 (Vancouver)
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser CF from financial activities 3
Examples for Debt Finance
credit on current accountcredit on current accountcredit on current accountcredit on current account
raisiraisiraisiraising of ang of ang of ang of a mortgage loanmortgage loanmortgage loanmortgage loan
integration of aintegration of aintegration of aintegration of a silent partnersilent partnersilent partnersilent partner
issuance ofissuance ofissuance ofissuance of corporate bondscorporate bondscorporate bondscorporate bonds
issuance ofissuance ofissuance ofissuance of commercial papercommercial papercommercial papercommercial paper
(certificates of d(certificates of d(certificates of d(certificates of deeeeposiposiposiposit)t)t)t)
participation certificatesparticipation certificatesparticipation certificatesparticipation certificates
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser CF from financial activities 3
The Maturity of Debt
maturity
medium-term financeshort-term finance long-term finance
1 year 5 years
EQUITY:
long-term finance
by nature
,,MATURITY" refers to:
1) remaining term (term to maturity)
or
2) notice period,
respectively
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser CF from financial activities 3
Exercise 6-12
The Vitaggi s.r.o., a sister company of the Jemná Čokoláda within the
Všeobecný potraviny's group of companies producing packet soup, reports
the subsequent data for the fiscal year 2025 (CZK mio.):
income (+)
expenses (-)
incoming payment (+)
outgoing payment (-)
(1) sales +1,600 +1,600
(2) materials -950 -950
(3) wages -200 -200
(4) taxes -100 -100
(5) issuance of participation certificates
with a term of 6 years
0 +4
(6) emission of corporate bonds with a
maturity of 8 years
0 +3
(7) absorption of the 2025 increase in
capital by the parent company
Všeobecný potraviny a.s.
0 +8
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser CF from financial activities 3
(8) raising of a bank credit on October
1, 2025, with a maturity of 6 months
0 +5
(9) interest -50 -50
(10) profit distribution 0 -210
(11) depreciation and write-off -55 0
(12) appreciation +20 0
(13) formation of provisions for bad
debts
-25 0
Classify the amount of money that Vitaggi has in the fiscal year 2025
generated with the aid of debt contracts by means of a one-column
three-rows table with the three rows standing for short-term, mediumterm
and long-term finance, respectively!
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser CF from financial activities 3
The Repayment of Debt (Fig. 6-10)
DE-criterion 3 DE-criterion 4
Fixed
income debt
Roll-over credit
(standard finance)
Floating rate notes
(emission finance)
R
I
R I
Installment redemption Redemption in grand total
CI
I
R R
I
Annuity redemption Zerobond time
Different methods for the calculation /
approximation of the internal rate of return
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser CF from operating activities
Exercise 7-2
Make up a source income statement for the Brnnské Marcipánové a
Nugátové Kontor by restructuring the 2025 income statement according
to the following form!
2025 2024
Revenues
Changes in inventories of finished goods and work in progress
Production for own fixed assets capitalized
Cost of purchased materials and services
Personnel expenses
Depreciation and amortization on tangible and intangible assets
Core operating profit
Other operating income
Other operating expenses
Other operating profit
Operating profit ("EBIT")
Income from participations
Income from other financial assets
Other interest income
Depreciation and amortization on financial assets and financial current assets
Interest expenses
Financial profit ("I")
Extraordinary income
Extraordinary expenses
Extraordinary items
Earnings before tax ("EBT")
Income tax ("T")
Other taxes
Earnings after tax ("EAT")
Source income statement (form)
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser CF from operating activities
Schmalenbach's
Bar Graph revisited (Fig. 7-1)
EBIT minus T
+ expenses that do not affect cash & cash equivalents
(correction type I) within
- income that does not affect cash & cash equivalents
(correction type II)
operations!!!
- non-expense applications of cash & cash equivalents
(correction type III)
+ non-expense originations of cash & cash equivalents
(correction type IV)
= Cash flow from operating activities
IV.
III.
II.
I.EBIT minus T
(Incoming - outgoing payments =)
CF from operating activities
(Income - expenses =)
within operations !!!
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser CF from operating activities
Exercise 7-3
Starting point is exercise 4-4. As you can easily check, this is CFP's source
income statement for the fiscal year 2025.
Bridge the gap between EBIT
minus T and cash flow from
operating activities by making
up a calculation considering
for the four different types of
corrections!
2025
Revenues 700
Changes in inventories of finished goods and work in progress 0
Production for own fixed assets capitalized 0
Cost of purchased materials and services 400
Personnel expenses 180
Depreciation and amortization on tangible and intangible assets 5
Core operating profit 115
Other operating income 20
Other operating expenses 0
Other operating profit 20
Operating profit ("EBIT") 135
Income from participations 0
Income from other financial assets 0
Other interest income 0
Depreciation and amortization on financial assets and financial current assets 0
Interest expenses 35
Financial profit ("I") -35
Earnings before tax ("EBT") 100
Income tax ("T") 0
Other taxes 0
Earnings after tax ("EAT") 100
Source income statement for CFP v.o.s., Brno, for the time period from January 01, 2025, to
December 31, 2025 (TCZK)
MU ESF Brno / FH Bochum Treasury Management
Prof. Dr. Dirk Kaiser CF from operating activities