单击此处编辑母版标题样式,单击此处编辑母版文本样式,第二级,第三级,第四级,第五级,*,Chapter 9,International Cash Management,1,Chapter 9 International Cash M,Objectives,This chapter emphasizes the decisions,involved in management of cash by an,MNC.The additional opportunities and,risks of cash management for an MNC,versus a domestic firm should be stressed.,The specific objectives are:,2,Objectives This chapter emp,Objectives,to explain the difference between a subsidiary,perspective and a parent perspective in,analyzing cash flows;,to explain the various techniques used to,optimize cash flows;,to explain common complications in optimizing,cash flows;and,to explain the potential benefits and risks of,foreign investments.,3,Objectivesto explain the diffe,Cash Flow Analysis:Subsidiary Perspective,The management of working capital has a,direct influence on the amount and timing,of cash flow:,inventory management,accounts receivable management,cash management,4,Cash Flow Analysis:Subsidiary,Cash Flow Analysis:Subsidiary Perspective,Subsidiary Expenses,International purchases of raw materials or,supplies are more likely to be difficult to manage,because of exchange rate fluctuations,quotas,etc.a larger inventory is thus required by MNC,compared with domestic firms.,If the sales volume is highly volatile,larger cash,balances may need to be maintained in order to,cover unexpected demands.,5,Cash Flow Analysis:Subsidiary,Cash Flow Analysis:Subsidiary Perspective,Subsidiary Revenue,International sales are more likely to be,volatile because of exchange rate,fluctuations,business cycles,etc.,Looser credit standards may increase,sales(accounts receivable),though often,at the expense of slower cash inflows.,6,Cash Flow Analysis:Subsidiary,Cash Flow Analysis:Subsidiary Perspective,Subsidiary Dividend Payments,Forecasting cash flows will be easier if the dividend payments and fees(royalties and overhead charges)to be sent to the parent are known in advance and denominated in the subsidiarys currency.,7,Cash Flow Analysis:Subsidiary,Cash Flow Analysis:Subsidiary Perspective,Subsidiary Liquidity Management,After accounting for all cash outflows and inflows,the subsidiary must either invest its excess cash,or borrow to cover its cash deficiencies.,If the subsidiary has access to lines of credit and,overdraft facilities,it may maintain adequate,liquidity without substantial cash balances.,8,Cash Flow Analysis:Subsidiary,Centralized Cash Management,While each subsidiary is managing its own,working capital,a centralized cash management,group is needed to monitor,and possibly,manage,the parent-subsidiary and intersubsidiary cash flows.,(Exhibit 9.1),International cash management can be,segmented into two functions:,optimizing cash flow movements,and,investing excess cash.,9,Centralized Cash ManagementWhi,Exhibit 9.1 Cash Flow of the Overall MNC,parent,Short-term,Securities,Long-term,Projects,Sources of,Debt,Stockholders,Subsidiary“1”,Subsidiary“2”,Interest and Principal on Excess Cash Invested by Subsidiary,Loans or Investment,Fees and Part,of Earnings,Excess Cash to be Invested,Excess Cash to be Invested,Fees and Part of Earnings,Loans or Investment,Interest and principal on Excess Cash Invested by Subsidiary,Funds for Supplies,Funds for Supplies,Purchase of Securities,Funds Received from,Sales of Securities,Long-term Investment,Return on Investment,Loans,Repayment on Loans,Funds Received from New Stock Issues,Cash Dividends,10,Exhibit 9.1 Cash Flow of the O,Centralized Cash Management,The centralized cash management division,of an MNC cannot always accurately,forecast the events that may affect parent-,subsidiary or intersubsidiary cash flows.,It should,however,be ready to react to,any event by considering,any potential adverse impact on cash flows,and,how to avoid such adverse impact.,11,Centralized Cash ManagementThe,Techniques to OptimizeCash Flows,Accelerating Cash Inflows,The more quickly the cash inflows are received,the more quickly they can be invested or used,for other purposes.,Common methods include the establishment of,lockboxes,around the world(to reduce mailing,time)and,preauthorized payments,(direct,charging of a customers bank account),12,Techniques to OptimizeCash Fl,Techniques to OptimizeCash Flows,Lockboxes,is a service offered by banks to,companies in which the company receives,payments by mail to a post office box and the,bank picks up the payments several times a day,deposits them into the companys account,and,notifies the company of the deposit.This,enables the company to put the money to work,as soon as its received,but the amounts must,be large in order for the value obtained to,exceed the cost of the service.,13,Techniques to OptimizeCash Fl,Techniques to OptimizeCash Flows,Minimizing Currency Conversion Costs,Netting,reduces administrative and transaction,costs through the accounting of all transactions,that occur over a period to determine one net,payment.,A,bilateral netting,system,involves,transactions between two units,while a,multilate