INTERNATIONAL FINANCIAL MANAGEMENT
1.Foreign Currency Management
This involves managing risks and opportunities related to fluctuations in exchange rates.
It includes hedging against currency risk, deciding on currency denominations for transactions, and managing currency exposure to protect the firm’s value.
2. Overseas Investment Management
This type focuses on decisions related to investing in foreign countries, including capital budgeting for international projects, evaluating foreign investment opportunities, and managing returns and risks associated with these investments.
3. Capital Budgeting in an International Context
Evaluating and selecting long-term investment projects abroad, considering factors like political risk, exchange rate risk, and differing economic conditions.
This is more complex than domestic capital budgeting due to additional uncertainties.
4. Working Capital Management
Managing short-term assets and liabilities in foreign operations, including cash management, receivables, and payables in multiple currencies and jurisdictions.
5.Risk Management
This includes managing various international risks such as:
- Political Risk: Risks arising from political changes or instability in foreign countries.
- Foreign Exchange Risk: Risks from changes in currency values, including transaction, economic, and translation exposures.
6. Financing Decisions
Deciding on the sources of funds for international operations, including raising capital in foreign markets, managing international debt, and optimizing the capital structure globally.
7. International Cash Management
Efficiently managing cash flows across countries to optimize liquidity and minimize costs related to currency conversion and transfer.
8. Tax Management and Regulatory Compliance
Navigating different tax regimes and regulatory environments to optimize tax liabilities and ensure compliance with international laws.