Liquidity management strategy | My Assignment Tutor

Agenda item 2.4: Liquidity managementstrategyFor approvalAs a holder of refundable deposits and accommodation bonds (includingRefundable Accommodation Deposits (RADS)), GR8Kare is required toimplement a written liquidity management strategy. At the June 2020 boardmeeting, such a statement was approved by the board.In summary, the board approved the following: Based on the average length of stay, the industry average time forpayment and government regulations, the amount to be held should be10% of the funds deposited.Given the level of refundable deposits at 30 June 2020(5542,451,000), GR8Kare needs to hold liquid assets of S54,245,100.Liquid assets as currently defined for GR 8Kare represent cash or cashequivalents.As at 30 June, our cash position placed us well below the above limits.Since 30 June, there has been significant investment in our facilities, plus aneed to repay a number of Diocese loans. As a result, the cash position ofGR8Kare has fallen below our stated liquid asset requirement, resulting in abreach of our stated liquidity management strategy.Existing legislation allows aged care providers to include unrestricted bankfacilities (for example, overdrafts and/or lines of credit) within theiraccessible funds. As GRSK are currently has access to a further $40 millionline of credit with Big Bank, it is recommended that the board adjust theliquidity management strategy to define liquid assets to include cash or cashequivalents and 100% of any of an unused line of credit.This change would, in effect, mean we are no longer in breach of ourliquidity management strategy.RecommendationThe board approve the above change to the definition of liquid assets withinthe liquidity management strategy.Joy MorganCFO


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