SInternational Financial Management
Plan:Section I1)The essence of international financial management1.1 Concept and main functions of IFM1.2 Nature & Scope1.3International Trade Theories2) International Business MethodsSection II3)General directions of International Financial Management3.1 Capital Budgeting3.2 Foreign portfolio investment3.2 Working capital management3.3 Trade Finance3.4 Letter of credit3.5 Bank Guarantee3.6 Collection and discounting of bills3.7 Dividend Police3.8 Risk management
The essence of international financial managementIFM- is a popular concept which means management of finance in an international business environment, it implies, doing of trade and making money through the exchange of foreign currency.The international financial activities help the organizations to connect with international dealings with overseas business partners- customers, suppliers, lenders. It is also used by government organization and non-profit institutions.
The main objective of international financial management is to maximise shareholder wealth.Adam Smith wrote in his famous title, “Wealth of Nations” that if a foreign country can supply us with a commodity Cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own in which we have some advantage.The essence of international financial management
Basic FunctionsACQUISITION OF FUNDS (FINANCING DECISION)This function involves generating funds from internal as well as external sources. The effort is to get funds at the lowest cost possible.
Basic Functions-INVESTMENT DECISIONIt is concerned with deployment of the acquired funds in a manner so as to maximize shareholder wealth. Other decisions relate to dividend payment, working capital and capital structure etc. In addition, risk management involves both financing and investment decision.
Nature & ScopeThe treasurer is responsible for :financial planning analysisfund acquisitioninvestment financingcash managementinvestment decision and risk management Controllerdeals with the functions related to :external reportingtax planning and managementmanagement information systemfinancial and management accountingbudget planning and control, and accounts receivables etc.Finance function of a multinational firm has two functions
Environment at International Levelthe knowledge of latest changes in forex rates instability in capital marketinterest rate fluctuationsmacro level chargesmicro level economic indicatorssavings rateconsumption patterninvestment behavior of investorsexport and import trendsCompetitionbanking sector performanceinflationary trendsdemand and supply conditions etc.
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