国际企业的财务管理.pptVIP

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Investment decisions Capital budgeting: Quantifies the benefits, costs and risks of an investment Managers can reasonably compare different investment alternatives within and across countries Complicated process: Must distinguish between cash flows to project and those to parent Political and economic risk can change the value of a foreign investment Connection between cash flows to parent and the source of financing must be recognized Project and parent cash flows Project cash flows may not reach the parent: Host-country may block cash-flow repatriation Cash flows may be taxed at an unfavorable rate Host government may require a percentage of cash flows to be reinvested in the host country Adjusting for political and economic risk Political risk: Expropriation - Iranian revolution, 1979 Social unrest - after the breakup of Yugoslavia, company assets were rendered worthless Political change - may lead to tax and ownership changes Examples. Collapse of communism in Eastern Europe Attack on the world trade center Economic risk Inflation Financing decisions When considering options for financing a foreign investment, Int. businesses have to consider two factors Source of financing Financial structure Source of financing Global capital markets for lower cost financing. Impact of host country-host-country may require projects to be locally financed through debt or equity Limited liquidity raises the cost of capital. Host-government may offer low interest or subsidized loans to attract investment. Impact of local currency (appreciation/depreciation) influences capital and financing decisions Financial structure Financial structure: Debt/equity ratios vary with countries. Tax regimes Follow local capital structure norms? More easily evaluate return on equity relative to local competition Good for company’s image Best recommendation: adopt a financial struct