MBA-International Accounting and Finance - Essay Example

This means that they try to achieve quick realization of credit sales and delay the payment of the payables. By way of this they try to maximize “net float” (Brigham & Ehrhardt, 2008, pp.958). In a business it is important that the financial resources are channelized effectively. This is facilitated by the financial managers who allocate the resources to the various departments as per their requirement. Besides the need based allocation of the resources it is important that the business does not lose out a possibility of earning an additional income on the surplus cash balances.

To ensure that the cash balances do not remain idle the financial managers invest these cash balances temporarily to earn positive returns. The multinational companies like their domestic counterparts employ the same procedures for the achievement of the above mentioned goals. This indicates that the basic objectives of the multinational and domestic companies are the same but the task of multinational companies is far complex. When it comes to investment of funds the domestic companies generally think with respect to domestic securities whereas the financial managers of the multinational companies are expected to be aware of the investment opportunities across the world.

The multinational companies generally work in association with the international bankers and their staff and are thus in a position to make gains out of best available rates anywhere in the world. Policies relating to credit are more crucial for the multinational companies as compared to the purely domestic firms. For instance trade in US involves poorer or developing nations. In this kind of a situation ‘granting credit’ is the necessary norm for business. Moreover the developed nations impart credit facilities to their foreign customers for making their manufacturing firms globally competent.

When it comes to granting credit the risk of the multinational companies is higher than