ibm unit07 ppt final

7/28/2019 Ibm Unit07 Ppt Final

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Program : MBA

Semester : IV

Subject Code : MB0053

Subject Name : International Business Management

Unit Number : 07

Unit Title : International Financial Management (IFM)

Lecture Number : 07

Lecture Title : International Financial Management (IFM)

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International Financial Management(IFM)

Objectives

The objectives of this lecture are to:

Differentiate between domestic and international financial

management

Describe the various components involved in international financial

management

Discuss the scope of international financial management

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Unit-7 International Financial Management (IFM)


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Lecture Outline

Introduction

Overview of IFM

Components of IFM

Scope of IFM

Summary

Check Your Learning

Activity

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Introduction

The maintenance of the monetary transactions of an organisation is

financial management.

There are two branches of financial management domestic and

international financial management.

The working capital is associated with the management of current

assets and current liabilities.

Taxation plays a vital role in the worldwide operation of firms.

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Overview of IFM

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IFM modules



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Overview of IFM Contd..

Domestic vs. international financial management

Managing finance in international business is considerably different from

managing finance in domestic business.

The factors that distinguish international and domestic financial

management are:

Foreign exchange risk

Political risk

Market imperfection

Enhanced opportunity set


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Components of IFM

Components of IFM

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Foreign exchangemarkets

Components ofIFM

Internationalfinancial markets

Internationalmonetary systems

Foreign currencyderivatives



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Scope of IFM

Management of working capital

The objective of working capital management is to ensure that

organisations:

Maintain their operations normally

Have adequate cash flow to satisfy short term debt and operational

expenses for the future.

The two types of working capital policies are:

Liquidity policy

Profitability policy

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Scope of IFM Contd..

Financing decisions

The following factors are considered while raising the capital:

Flexibility

Risk

Income

Control

Time

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Taxation

Taxation is the core for a number of financing decisions such as:

International investment decisions

International working capital decisions

Fund raising decisions

Decisions related to dividend and other payments

Basis of international tax system

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Scope of IFM Contd..

Tax neutrality

Tax equity

Avoidance of double taxation




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Summary

The objective of IFM is to maximise the value of an

organisation.

Foreign exchange market, foreign currency derivatives,

international financial markets and international monetary systems are

essential in international financial management.

An estimation of working capital is made after understanding the nature of

production.

The factors considered in financing decision are flexibility, risk, income,

control and time.

The basis of international tax system are tax neutrality, tax equity and

avoidance of double taxation.

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Check Your Learning

1. Which IFM module covers the financial decisions and

valuation techniques to be modified in a cross-border setting?

Ans: Cross-border valuation and financing

2. What are the basis of international tax system?

Ans: The basis of international tax system are:

Tax neutrality

Tax equity Avoidance of double taxation

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Activity

Visit the nearest business organisation and find out how a financial

manager manages the working capital of the business.

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ibm unit07 ppt final

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