四川师范大学商学院国际财务管理英文 chapter8.pdfVIP

Chapter Eight International Cash Management Chapter Objectives: � To explain the difference in analyzing cash flows from a subsidiary perspective versus a parent perspective; � 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 - 1 Cash Flow Analysis: Subsidiary Perspective Cash Flow Analysis: Subsidiary Perspective CCaasshh FFllooww AAnnaallyyssiiss:: SSuubbssiiddiiaarryy PPeerrssppeeccttiivvee • The management of working capital has a direct influence on the amount and timing of cash flow. • Subsidiary expenses – It is difficult to forecast the payments for international purchases of raw materials or supplies because of exchange rate fluctuations, quotas, sales volume volatility, etc. 3 - 2 Subsidiary Perspective Subsidiary Perspective SSuubbssiiddiiaarryy PPeerrssppeeccttiivvee • Subsidiary revenue – International sales may be more volatile than domestic sales because of exchange rate fluctuations, business cycles, etc. • Subsidiary dividend payments – If the payments and fees (royalties, overhead charges) for the parent are known and denominated in the subsidiary’s currency, forecasting cash flows will be easier. 3 - 3 Subsidiary Perspective Subsidiary Perspective SSuubbssiiddiiaarryy PPeerrssppeeccttiivvee Subsidiary Liquidity Management Subsidiary Liquidity Management SSuubbssiiddiiaarryy LLiiqquuiiddiittyy MMaannaaggeemmeenntt • After accounting for all cash outflows and inflows, the s