Question

Georg Zeller is a conservative chief financial officer. He oftern over-estimates the need for cash in his firm. The internal auditor has just reported to the board that Goerg kept $250000 more in the current account than was necessary for a particular 6 months period. Funds in the current account earned 0.25% while funds in the almost risk free short term money market earned 5.25%. The internal audit relorted a cost to the firm post tax through this action. What amount would you report to the board as the cost? Would it be pre or post-tax?

Answer 1

Answer:

Georg Zeller is a conservative chief financial officer. He oftern over-estimates the need for cash in his firm. The internal auditor has just reported to the board that Goerg kept $250000 more in the current account than was necessary for a particular 6 months period. Funds in the current account earned 0.25% while funds in the almost risk free short term money market earned 5.25%. The internal audit relorted a cost to the firm post tax through this action. What amount would you report to the board as the cost? Would it be pre or post-