國際金融與國際財務(wù)管理chap

1、1221International Cash ManagementChapter ObjectivesThis chapter will:A. Explain working capital management from a subsidiary perspective versus a parent perspectiveB. Explain the various techniques used to optimize cash flowsC. Explain the decision to invest cash internationally2Multinational Workin

2、g Capital ManagementSubsidiary ExpensesSubsidiary RevenueSubsidiary Dividend PaymentSubsidiary Liquidity Management3Centralized Cash ManagementDecentralized management is not optimal because it will force MNC to maintain larger cash investment than necessary. modating cash shortages by transferring

3、cash from subsidiaries with excess funds to those that need funds.Technology used to facilitate fund transfersMonitoring of cash positions45Exhibit 21.1 Cash Flow of the Overall MNC5Techniques to Optimize Cash FlowsAccelerating Cash Inflows using lockboxes and preauthorized payments.Minimizing curre

4、ncy conversion costs by netting, using a bilateral netting system or a multilateral netting system.Managing blocked funds by incurring costs within the country or using transfer pricing.Managing intersubsidiary cash transfers by using a leading or lagging strategy.6Complications in Optimizing Cash F

5、lowCompany related characteristicsGovernment restrictionsCharacteristics of the banking system7Investing Excess CashDetermining the Effective Yield: a quicker methodr = (1 + if)(1 + ef) 1 where r = effective yield on foreign deposit, if = quoted interest rate, ef = percentage change in value of curr

6、ency8Investing Excess CashImplications of interest rate parity: Short term investing can be done on uncovered basis if IRP holds.Use of forward rate as a forecast Forward rate serves as a break-even point to assess short term investment decision.Relationship with International Fisher Effect: if IRP

7、holds and forward rate is an unbiased predictor of future spot rate, then we can expect IFE to hold.9Use of Exchange Rate ForecastsDeriving the ef that equates foreign and domestic yieldsUse of probability distributions.10Investing Excess CashDiversifying cash across currencies to limit the percentage of excess cash invested in each currency.Dynamic hedging: strategy of applying a hedge when the curre