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International cash management
Everything that can be counted does not necessarily count; everything that counts cannot necessarily be counted.
• Submitted by:• Iqbal Singh (07)• Ashish Borikar (09)• Gurdeep Nagi (37)• Kalpesh Nahata (38)• Rishi Shrivastava (54) Submitted to
Prof. Chitra Gouvnder
Cash Management
• Collection, concentration, and disbursement of cash.
• Preventing bankruptcy• Important for new and growing businesses
Cash Collection and Disbursement
• Reduce the time • Three "floats”
Cash Management in Troubled Times
SERVICES GENERALLY OFFERED
Account Reconcilement Services.Armored Car Services.Automated Clearing House.Cash Concentration Services.Lockbox - Wholesale
Contd…….
Positive Pay.Sweep accounts.Zero Balance Accounting.Controlled Disbursement.Advanced web service.
Objectives
• The ability to pay bills as they come due• Minimize the cash balance within the company with the
goal of optimizing corporate fund utilization.• To minimize the cost of funds, especially with high
interest rates in many countries.• Improve liquidity on a global basis.• To reduce political, economic, and exchange risks
through thing such as insurance, careful negotiations, forward contracts, and currency options.
• To improve the return on investment through careful consideration of return on investment and return on net worth.
Contd……
• Cash management can be centralized, regionalized, or decentralized.
• investment of excess funds.
• Accounts Receivable Management• Inventory Management• innovation or expansion
Cash Flow Analysis: Subsidiary Perspective
• Subsidiary Expenses• Subsidiary Revenue• Subsidiary Dividend Payments
Centralized Cash Management
Cash flow of overall MNC
Techniques to Optimize Cash Flows
• ¦ Accelerating cash inflows.• ¦ Minimizing currency conversion costs• ¦ Managing blocked funds• ¦ Managing intersubsidiary cash transfers
Complications in Optimizing Cash Flow
• ¦ Company-related characteristics• ¦ Government restrictions• ¦ Characteristics of banking systems
Investing Excess Cash
• How to Invest Excess Cash
Determining the Effective Yield
• Implications of Interest Rate Parity• Use of the Forward Rate as a Forecast
Diversifying Cash across Currencies
Dynamic Hedging
THE RISE OF THE MULTINATIONAL CORPORATION
Evolution of the Multinational Corporation
• Raw-Materials Seekers• Market Seekers.• Cost Minimizers.
CASE