Financial Management and International Finance Assignment Help
International Finance is an area of financial economics that handles financial interactions in between two or more countries, concerning itself with topics such as currency exchange rates, global financial systems, foreign direct financial investment, and problems of global financial management including political risk and FOREX risk fundamental in handling international corporations. When the countries of the world began opening their doorsfor each other, International Financial Management came into existence. Due to the open environment and versatility to carry out business in any corner of the world, company owners began browsing for chances even outside theircountry-boundaries.
The resultant of liberalization and technology advancement is today’s dynamic international business environment. Financial management for a domestic company and an international business is as considerably difficult as the chances in the two. The meaning and goal of financial management does not alter in international financial management however the characteristics and measurements changes dramatically. Financial Management suggests planning, arranging, directing and managing the financial activities such as procurement and use of funds of the business. It implies applying general management concepts to financial resources of the business.
The financial management is normally interested in procurement, appropriation and control of issued funds.
The goals can be:
- To guarantee regular and appropriate supply of funds to the issue.
- To make sure sufficient returns to the shareholders that depends upon the earning capacity, market price of the share, and expectations of the shareholders.
- To make sure optimum funds utilization. As soon as the funds are obtained, they should be made use of in optimum possible way a minimum of cost.
- To make sure safety on financial investment, i.e. funds must be invested in safe endeavors so that sufficient rate of return can be attained.
- To plan a sound capital structure. There need to be reasonable and sound composition of capital so that a balance is kept between financial debt and equity capital.
New business leaders and managers have to develop at least fundamental skills in financial management. Anticipating others in the company to handle finances is clearly throwing down the gauntlet. Basic skills in financial management start in the important areas of financial management and accounting, which must be done according to certain financial controls to ensure honesty in the accounting process. New leaders and supervisors should quickly go on to find out how to generate financial statements (from accounting journals) and examine those statements to actually comprehend the financial condition of the business. Financial analysis shows the “truth” of the scenario of a business such as financial management is one of the most essential practices in management. This topic will help people to comprehend basic practices in financial management, and develop the basic systems and practices needed in a healthy business.
A financial management system is the approach and software application that an organization uses to supervise and govern its income, costs, and assets with the objectives of making the most of revenues and making sure sustainability. An efficient financial management system improves short-term and long-term business performance by improving invoicing and cost collection, getting rid of accounting errors, lessening record-keeping redundancy, ensuring compliance with tax and accounting policies, helping personnel to measure spending plan planning, and offering versatility and expandability to accommodate change and growth.
Functions of Financial Management
- Estimation of capital demands:
A finance manager needs to make evaluation with regards to capital requirements of the business. This will depend upon anticipated costs, earnings, future programs and policies of a concern. Estimations need to be made in a sufficient way which enhances earning capability of enterprise.
- Determination of capital composition is once the estimation has been made, the capital structure needs to be decided. This involves short-term and long-term debt equity analysis. This will depend upon the percentage of equity capital a business is having and added funds which have to be raised from outdoors celebrations.
- Selection of sources of funds:
For added funds to be procured, a company has numerous options like:
- Issue of debentures and shares.
- Loans to be extracted from banks and financial institutions.
- Public deposits to be drawn like in kind of bonds.
Selection of aspect will depend upon relative merits and demerits of each source and period of financing.
- Investment of funds:
The finance manager has to decide to assign funds into rewarding endeavors so that there is safety on investment and regular returns is possible.
- Disposal of surplus:
The net revenues decision need to be made by the finance manager. This can be done in two ways:
It includes determining the rate of dividends and other advantages such as reward.
The volume has to be decided which will rely on expansion, innovation and diversity plans of the business.
The term ‘International Finance’ has not originated from Mars. It resembles the domestic financing in a number of the elements. The most essential distinction in between global financing and domestic financing is of international currency or to be more the currency exchange rate if we discuss on a macro level. In domestic financial management, we concentrate on minimizing the cost of capital while raising funds and improving the returns from financial investments to produce wealth for investors. We do refrain from doing any various in worldwide financing. The goal of financial management continues to be same for both domestic and global financing i.e. wealth maximization of investors.
International Financial Management is a well recognized term in today’s world and it is similarly called global financing. It suggests financial management in a global business environment. It is numerous because of numerous currencies of various countries, various political scenarios, imperfect markets, and differed chance sets. International financial management includes a lot of currency derivatives whereas such derivatives are extremely less used in domestic financial management. The significance and objective of financial management does not change in international financial management however the measurements and characteristics changes significantly.
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