Nobody downloaded yet

Financial Resourcs Management - Essay Example

Comments (0) Cite this document
Summary
Capitalising an MNC and managing its financial structure is often faced by various complications and risks due to the fact that it operates in different countries which have different rules and regulations, economic conditions and political leaderships. The operating environment…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER96.8% of users find it useful
Financial Resourcs Management
Read TextPreview

Extract of sample "Financial Resourcs Management"

Download file to see previous pages It is therefore important to evaluate some of the risks and complications that arise as a result of operating in several countries when making capital financing decisions.
Foreign exchange rates as a result of operations spanning several countries are a major risk for MNCs even when they are considering their capital structure and financing issues. A country with exchange rate controls means that the MNC will have difficulties with international capital low and the solution can only be the use of debt. The use of equity financing in such a country will affect the company’s ability to invest in other countries since there are limitations to the flow of capital from the country to another (Horcher, 2013).
One of the major complications of financing MNCs related to the government or political environment is the taxation policies of the foreign country. Taxation has been viewed by various researchers as one of the major factors that influence the capital structure of an MNC. The debt to asset ratio of an MNC is positively related to the tax rate applicable in the host country and negatively related to that of the home country. This means that in case the corporate tax rate in a foreign country is high, a company will prefer to use debt financing in place of equity financing as a source of capital as it will reduce its tax liability and thus increased earnings (Huizinga, Laeven & Nicodame 2008).
Legal issues may also bring about complications for MNCs such as the issue of repatriation of profits. If a country finances its operations using equity financing and the legal requirements in a country are that there are limitations to the repatriation of profits, this may affect the ability of the company to pay dividends to shareholders outside the country. Another issue is that using equity financing in a country that regulates operations in terms of employment of local people means that the MNC might ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Financial Resourcs Management Essay Example | Topics and Well Written Essays - 2500 words”, n.d.)
Financial Resourcs Management Essay Example | Topics and Well Written Essays - 2500 words. Retrieved from https://studentshare.org/finance-accounting/1682242-financial-resourcs-management
(Financial Resourcs Management Essay Example | Topics and Well Written Essays - 2500 Words)
Financial Resourcs Management Essay Example | Topics and Well Written Essays - 2500 Words. https://studentshare.org/finance-accounting/1682242-financial-resourcs-management.
“Financial Resourcs Management Essay Example | Topics and Well Written Essays - 2500 Words”, n.d. https://studentshare.org/finance-accounting/1682242-financial-resourcs-management.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Financial Resourcs Management

Financial management

...?Executive Summary Financial management is at the core of implementing organizational objectives and goals since finances are the engine of organizational survival. Financial management practices differ in different organizations but common financial management practices are must be adhered. Non-governmental Organizations are set up to offer services or goods to people with the aim of assisting them though capacity building. Financial management practices in NGO’s are different from the operations of For-Profit organizations. For instance, NGO’s source their funds through donations, sponsors or charitable sources. This is different from For-Profit organizations that source their funds from shareholders who are the real owners... of these...
6 Pages(1500 words)Essay

Financial Management

...programme, replacements and upgrades requires resources in excess of supported borrowing approval from the government. There should be separate revenue budgets and capital expenditure programmes. The balance between the revenue and capital budgets is to be determined by the authority to achieve a balanced budget plan. The authority is required to make its own borrowing plans according to internal calculations. All the calculations regarding borrowings should be in compliance with the treasury management policies as well as according to the Local government act of 2002 (GMFRA Capital and revenue budget 2009/11. 2010). The implementation of financial systems in fire rescue agencies is...
10 Pages(2500 words)Assignment

Financial Management

...?Financial Management Part Identify and explain the objectives and general principles of Panel of Takeovers and Merger The panel of Takeovers is an independent body which was developed in 1968 its objective is the fair treatment of shareholders and an opportunity is put in front of them to determine the general benefits of a takeover and that an offeror provides same if not better treatment to shareholders of the same class (Hicks & Goo 2008, p. 569). It essentially provides a structured framework through which takeovers are carried out and to uphold the reliability of the financial markets in combination with regulatory regimes of other places. Matters of financial or...
7 Pages(1750 words)Essay

Financial Management

...? Amazon and Apple Amazon and Apple Financial crisis presents a number of challenges to businesses. These challenges are different depending on the products or services a company provides or on the size of the business. The challenges may include reduced profits and reduced sales. However, a business has to respond to these challenges if it has to remain in business by creating measures that address, for instance reduced profits or that increase sales. Apple and Amazon are examples of Multinational Businesses that faced the financial crisis of 2008; diversified measures implemented them and recovered from the reducing profits they were earning (Foster, 2009). Apple Inc, on one hand, is a multi national corporation in California... that...
5 Pages(1250 words)Research Paper

Financial Management

...with this project, which amounts to 3,000,000. All in all, the total initial outlay by Johnson industries is 12,000,000. Question 12-2 Nixon Communications is trying to estimate the first-year operating cash flow (at t = 1) for a proposed project. The financial staff has collected the following information: Projected sales $10 million Operating costs (not including depreciation) $7 million Depreciation $2 million Interest expense $2 million The company faces a 40% tax rate. What is the project’s operating cash flow for the first year (t = 1)? question 12-2             projected sales 10000000 less: operating costs -7000000 less:...
8 Pages(2000 words)Essay

Financial Management

...Financial Management Introduction: Finance is the integral part of any organisation. Financial management plans for the future cash outflow. The keyobjective of finance management is to create wealth to the business organisation, generate cash flow and to provide an adequate investment for the free flow of the business activities. The main objective of the financial management is to provide funds for the business. This is the backbone of the business because no firm or company can run without funds. There are many options for availing funds from different quarters. Although the discretion lies with the...
12 Pages(3000 words)Essay

Financial Management

...Financial Management Submitted by: XXXXX XXXXXX Number: XXXXXXXX of XXXXXXXX XXXXXXX XXXXXXXX XXXXXX Date of Submission: XX – XX – 2009 Number of words: 1651 (Excluding Bibliography) Part A: The importance of capital structure and the cost of capital in the efficient financial management of large companies Financial Management: “Financial management entails planning for the future of a person or a business enterprise to ensure a positive cash flow. It includes the administration and maintenance of financial assets. Besides, financial management covers the...
6 Pages(1500 words)Essay

Financial Management

...other. A company with high levels of profit margins generally tend to have a low level of working capital. Similarly a company with low level of working capital will have much higher levels of liquidity (Bhattacharya, 2001). The working capital management mainly deals with the amount of liquidity of the firm and the profitability. The main aim is to ensure that both are in place while dealing with the day to day processes and operations. The short term and long terms financial planning play a major role in the overall liquidity of the company. The long term financial planning and the basic availability of the resources are both managed by the overall...
8 Pages(2000 words)Essay

Financial management

...and optimal performance, a W/C ratio between 1.2 and 2.0 is sufficient. A debt ratio that is greater than 1 would indicate that Mr. Banks company owns more debts in comparison to assets. Similarly, if his company is capable of having a ratio that is less than 1, this indicates that PQ has more assets compared to debt. When the debt ratio is used in conjunction with other measures of financial health, Mr. Banks would find it easier to determine the risk level his company is to face in the near future. Gross profit margin: If PQ earned $20 million in revenue solely from producing widgets and was successful in incurring $10 million in COGS- related expense, the gross profit margin of Mr. Banks Company would be 50%. This...
6 Pages(1500 words)Case Study

Financial Management

...Financial Management no. Amalgamated Becoming a winner at anything worthwhile requires a game plan. This idea applies to organizations, departments, teams and even to individuals. Being successful entails making good use of the available resources to the best advantage. For the profit making company, such as the Amalgamated Industries Limited (AIL), competition and profitability are much important aspects. The Amalgamated Industries Limited (AIL), require a strategy which would help them to increase their profitability, gain more market share and increase their approval ratings. In order to determine the best strategy for the company, there is the need to understand fully the external and internal environmental factors that affect... . The...
9 Pages(2250 words)Case Study
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Financial Resourcs Management for FREE!

Contact Us