The First Step in Managing Disaster Risk Is

question 16

Multiple Choice

The first step in managing disaster risk is

• A) to obtain business interruption insurance.
• B) disaster prevention.
• C) contingency planning.
• D) to analyze and list recovery priorities.

Understand the concept of disbursement and collection floats in cash management.

Calculate the daily fees appropriate for eliminating float entirely.

Evaluate the financial impact of implementing a lockbox system on collection times and net cash flows.

Determine the average daily float based on the cheque amounts and collection delays.

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Definitions:

Cost Method

An accounting approach where investments are recorded at their original purchase cost, without adjustment for changes in market value.

Goodwill

An intangible asset that arises when a company acquires another company for a price higher than the fair value of its net identifiable assets.

Equity Method

A method of accounting in which an investor recognizes its share of the profits and losses of an investee that it influences but does not control.

Acquisition Differential

The difference between the purchase price of an acquired company and the fair value of its identifiable net assets. This differential is often allocated to goodwill or adjusted against specific assets.