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Presentation On International Financial Management

International financial management involves managing finances across international borders. It deals with currencies, political risks, expanded opportunities, and market imperfections. The scope of international financial management includes estimating financial requirements, deciding capital structures, and selecting financing sources. Understanding international finance is important for any business operating globally or being impacted by global economic trends and financial crises. International finance promotes integration of economies and equitable access to capital on a global scale.

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465 views17 pages

Presentation On International Financial Management

International financial management involves managing finances across international borders. It deals with currencies, political risks, expanded opportunities, and market imperfections. The scope of international financial management includes estimating financial requirements, deciding capital structures, and selecting financing sources. Understanding international finance is important for any business operating globally or being impacted by global economic trends and financial crises. International finance promotes integration of economies and equitable access to capital on a global scale.

Uploaded by

Sukruth S
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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PRESENTATION ON INTERNATIONAL

FINANCIAL MANAGEMENT
TEAM MEMBERS

LAVANYA R

MAHALAKSHMI S

MONISHA G

MONIKA SINGH J

MANJULA C P
INTRODUCTION
International financial management is a well-known term in today's world and
it is also known as international finance. It means financial. management in an
international business environment. It is different because of the different
currencies of different countries, dissimilar political situations, imperfect
markets, diversified opportunity sets, etc.
The main objective of International financial management is to maximize
Shareholders wealth. This would require making sound investment and
financing decisions that would result in adding value to the firm.
International financial management came into, being when the countries, of the world
started opening their doors foreach other, This phenomenon is well, known by the
name of ” liberalization". Due to the open environment and freedom to conduct
business in any Corner of the world, entrepreneurs started, looking for opportunities
even outside their country boundaries. The spark of liberalization, was further aired
by. swift progression in telecommunications and transportation technologies that too
with increased accessibility and daily dropping prices. Apart from everything else, we
cannot forget the contribution of financial innovations Such as Currency derivatives;
cross border, stock listings, multi-currency bonds, international mutual funds, and
other international market instruments.
The result of liberalization and technology advancement is
today's dynamic international business environment. Financial
management for a domestic business and an international
business is as dramatically different as the opportunities in the
two. The meaning and objective of financial management do
not change in international financial management but the
dimensions and dynamics change drastically.
IN SIMPLE WORDS:
• International financial management is the art of managing money on a
global scale.
• IFM-is a popular concept which means Management of finance in an
international Business environment, it implies, doing of trade and
making money through the exchange of Foreign currency.
• The international financial activities help the organization to connect
with International dealings with overseas business partners-customers,
suppliers, Lenders. It is also used by Government Organizations and
Non profit institutions.
NATURE OF INTERNATIONAL FINANCIAL
MANAGEMENT
1. Foreign exchange risks: In a domestic economy this risk is
generally ignored because a single national currency serves as the main
medium of exchange within a country, When different national
currencies are exchanged for each other, there is a definite risk of
volatility in foreign exchange rates. The present International Monetary
System set up is characterised by a mix of floating and managed
exchange rate policies adopted by each nation keeping in view its
interests. In fact, this variability of exchange rates is widely regarded as
the most serious international financial problem facing corporate
managers and policy makers.
2. Political risk: Political risk ranges from the risk of loss (or gain)
from unforeseen government actions or other events of a political
character such as acts of terrorism to outright expropriation of assets
held by foreigners. For example, in 1992, Enron Development
Corporation, a subsidiary of a Houston based Energy Company, signed
a contract to build India’s longest power plant. Unfortunately, the
project got cancelled in 1995 by the politicians in Maharashtra who
argued that India did not require the power plant. The company had
spent nearly $ 300 million on the project.
3. Expanded Opportunity Sets: When firms go global, they also
tend to benefit from expanded opportunities which are available now.
They can raise funds in capital markets where cost of capital is the
lowest. The firms can also gain from greater economies of scale when
they operate on a global basis.

4. Market imperfections: Market imperfections is in trend


nowadays, and this is one of major demerit for the concern. These are
various changes in nation's law, taxation, rules and regulations and
culture etc.
IMPORTANCE OF INTERNATIONAL
FINANCIAL MANAGEMENT
• Better allocation of capital: International investment has been
improvement in the global allocation of capital and an enhanced
ability to diversify investment portfolios.

• Increased prosperity: The major gain of international trade is that


it has brought about increased prosperity by allowing nations to
specialize in producing those goods and services at which they are
relatively efficient.
• Economic trends: The modern economic trendsare revealing that
International Trade is helpingthe growth of Developing Nations. The
opennessto international trade has been lucrative to thedeveloping
countries for rapid economic growth

• Growth and development: International trade isone of the most


crucial elements in theeconomic growth of a developing country.

• Confidence and energy: The present economicslowdown in trade


would be harmful for thedeveloping economies. New trade relationswould
help induce extra energy and confidenceinto the financial markets, and
support economiCgrowth and opportunity, in the short run.
SCOPE OF INTERNATIONAL FINANCIAL
MANAGEMENT

• Estimating Financial Requirements: The fundamental


responsibility of the international finance manager is to estimate the
short and long term financial requirements of the business. To
determine this, the finance manager has to prepare a financial plan for
the present as well as the future, based on the past financial data of the
business. This includes estimating the amount required for purchasing
fixed assets as well as the working capital.
• Deciding Capital Structure: The capital structure refers to the kind and
proportion of different securities for raising the required funds. After deciding
about the amount of funds required, its time to decide which type of securities
should be raised. It may be wise to finance the fixed assets via long-term debts
and current assets via short-term debts.
• Selecting a Source of Finance: After preparing the capital structure, the
appropriate source of finance needs to be determined. Various sources from
which finance can be raised can include share capital, debentures, financial
institutions, commercial banks, public deposit or equity, etc. If finance is
required for short-term then a bank, public deposits, and financial institutions
are appropriate. On the other hand, if finance is required for long-term, share
capital and debentures might be useful.
NEEDS OF INTERNATIONAL FINANCIAL
MANAGEMENT
• To understand a global economy, we must understand the change factors
and their impact.
• No international business is possible without significant understanding
of international finance.
• The field of finance deals with the concepts of time, money, risk and
how they are interrelated. It also deals with how money is spent and
budgeted.
• Even if a firm is not doing any international business, the knowledge of
international financial environment is a must. The domestic prices and
the profitability are greatly influenced by the changes taking place in the
international financial environment.
• There are many players and many instruments in vogue. The study of
international financial environment will tell us who these are and
when to use whom.
• There are many regulatory agencies. We can understand what role
they play in international finance and how and when they have faulted.
• There have been many financial crises. A study of them tells about the
reasons thereof and the steps taken to overcome those crises.
• There does exist national currencies and hence doing international
business is constantly concerned with exchange rates and the
associated risks.
CONCLUSION

International finance management plays important role in managing the


finance of various countries International finance promotes encourages
the integration of economics providing easy flow of monetary It results
in equity for countries which are part of global finance system.
International finance is an practice and theory of international business
management. It s connected with activities with movement of resources
is not easy tor the financial manager to handle and coordinate all the
international finance activities and to record them.
THANK YOU

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