CashManagement(国际财务管理,英文版).pptx

INTERNATIONALFINANCIALMANAGEMENTEUN / RESNICKSecond Edition18Chapter EighteenMultinational Cash ManagementChapter Objective:This chapter discusses various issues associated with multinational cash management.Chapter OutlinelThe Management of Multinational Cash BalanceslCash Management Systems in PracticelTransfer Pricing & Related IssueslBlocked Funds1The Management of International Cash BalanceslThe size of cash balances lThe currency denominationlWhere these cash balances are located2The Size of Cash BalanceslThe optimal size of the firms cash balances depend upon:nThe cost of keeping “too much” cash on hand. ui.e. the opportunity costs of holding cashnThe cost of not keeping enough cash on hand.ui.e. the trading costs associated with having too little cashnThe variability of cash flows.3Choice of CurrencylBy maintaining cash balances in a particular currency, the MNC is essentially speculating (or hedging?) in that currency.4Where Cash Balances are Located.lShould the firm have centralized cash management in the home country?lOr should the firm let each affiliate handle it locally?lWhere are borrowing costs lowest and investment returns highest?5Cash Management Systems in PracticelMultilateral Netting nIs an efficient and cost-effective mechanism for settling interaffiliate foreign exchange transactions.lNot all countries allow MNCs to net paymentsnBy limiting netting, more unnecessary foreign exchange transactions flow through the local banking system.6Multilateral NettingConsider a U.S. MNC with three subsidiaries and the following foreign exchange transactions:$10$35$40$30$20$25 $60$40$10$30$20$307Multilateral NettingBilateral Netting would reduce the number of foreign exchange transactions by half:$10$35$40$30$20$25 $60$40$10$30$20$308Multilateral NettingBilateral Netting would reduce the number of foreign exchange transactions by half:$10$35$40$30$25 $60$40$10$10$20$309Multilateral NettingBilateral Netting would reduce the number of foreign exchange transactions by half:$10$35$40$30$25 $60$40$10$10$20$3010Multilateral NettingBilateral Netting would reduce the number of foreign exchange transactions by half:$10$35$10$25 $60$40$10$10$20$3011Multilateral NettingBilateral Netting would reduce the number of foreign exchange transactions by half:$10$35$10$25 $60$40$10$10$20$3012Multilateral NettingBilateral Netting would reduce the number of foreign exchange transactions by half:$10$35$10$25 $60$40$10$10$1013Multilateral NettingBilateral Netting would reduce the number of foreign exchange transactions by half:$10$35$10$25 $60$40$10$10$1014Multilateral NettingBilateral Netting would reduce the number of foreign exchange transactions by half:$25$10$25 $60$40$10$10$1015Multilateral NettingBilateral Netting would reduce the number of foreign exchange transactions by half:$25$10$25 $60$40$10$10$1016Multilateral NettingBilateral Netting would reduce the number of foreign exchange transactions by half:$25$10$25 $20$10$10$1017Multilateral NettingBilateral Netting would reduce the number of foreign exchange transactions by half:$25$10$25 $20$10$10$1018Multilateral NettingBilateral Netting would reduce the number of foreign exchange transactions by half:$25$10$15 $20$10$1019Multilateral NettingConsider simplifying the bilateral netting with multilateral netting:$25$10$15 $20$10$1020Multilateral NettingConsider simplifying the bilateral netting with multilateral netting:$15$10$15 $20$10$10$1021Multilateral NettingConsider simplifying the bilateral netting with multilateral netting:$15$10$15 $20$10$1022Multilateral NettingConsider simplifying the bilateral netting with multilateral netting:$15$10$15 $20$10$1023Multilateral NettingConsider simplifying the bilateral netting with multilateral netting:$15$10$15 $30$1024Multilateral NettingConsider simplifying the bilateral netting with multilateral netting:$15$10$15 $30$1025Multilateral NettingConsider simplifying the bilateral netting with multilateral netting:$15$10$15 $30$1026Multilateral NettingConsider simplifying the bilateral netting with multilateral netting:$10$15 $30$1027Multilateral NettingConsider simplifying the bilateral netting with multilateral netting:$10$15 $30$1028Multilateral NettingConsider simplifying the bilateral netting with multilateral netting:$10$15 $30$1029Multilateral NettingConsider simplifying the bilateral netting with multilateral netting:$10$15 $3030Multilateral NettingConsider simplifying the bilateral netting with multilateral netting:$10$15 $3031Multilateral NettingConsider simplifying the bilateral netting with multilateral netting:$15 $4032Multilateral NettingClearly, multilateral netting can simplify things greatly. $15 $4033Multilateral NettingCompare this:$10$35$40$30$20$25 $60$40$10$30$20$3034Multilateral NettingWith this:$15 $4035Transfer Pricing & Related IssueslThe Transfer Price is the price that for accounting purposes, is assigned to goods and services flowing from one division of a firm to another division.lControversial for a domestic firmnConsider the example of a firm that has one division that mills lumber and another that makes furniture. The transfer price of the lumber is a political as well as economic and accounting issue.36Transfer Pricing & Related IssueslFor MNC, there exists the added complications of: nDifferences in tax rates.nImport duties and quotas.nExchange rate restrictions on the part of the host country.37Blocked FundslA form of political risk is the risk that the foreign government may impose exchange restrictions on its own currency.lSeveral methods exist for moving blocked funds:nTransfer pricingnUnbundling servicesnParallel and back-to-back loansnSwaps38Blocked FundslAdditional strategies for unblocking funds:nExport creationnDirect negotiationuUsing the blocked funds to buy goods and services for the MNC.uFor example, use the National Airlines of the host country for travel of executives of the MNC, and pay for the tickets with the blocked funds.uTransfer local expatriates from home payroll to the local subsidiaries payroll.39End Chapter Eighteen40