Professional Documents
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International
Financial
Management
Exploring Financial Management Across Borders
Introduction
activities within the country alone.
We interact with other nations,
specifically currencies, resulting in
populated industries.
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General Introduction
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Icebreaker
Overview
International Financial Management
Introduction of the Topic A: Global Financial
Markets
6.1 In-depth Discussion of Topic A
?
activities of the organization
hat Is It
W
Optimum utilization to generate the highest possible
returns for the business.
Financial markets refer
broadly to any marketplace
where securities trading
Financial
market, and derivatives market.
Markets
Global financial markets
encompass the entire
worldwide system where
financial assets are traded
across borders.
TYPES OF FINANCIAL MARKETS
About it...
Financial markets can be
categorized into various types,
each serving distinct purposes and
participants.
Factors in
market conditions worldwide.
Markets
Inflation or deflation
Economic indicators
Natural calamities
Non-resolution doubts
Wars or other conflicts
starting with...
CURRENT EVENTS
INTERNATIONAL
TRANSACTIONS
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Risk Management
operating internationally.
Currencies?
What about it?
SEE MORE
there are two classifications of currency...
alue?
y v
nc
curre
TS & EXP
R O
O
RT
IMP
S
IMPORTS VS EXPORTS
these are the goods and these are the goods and
services that a country buys services produced
from other countries domestically and sold to
other countries.
EXPORTS
IMPORTS
Determinants
of Exchange
Rates
Inflation
Managed float
exchange rates
PURPOSE: 3
Transactional Exchange
Risk Rate Risks
2
Economic Risk
SIGNIFICANCE:
3
Understanding this allows for
better financial planning and
Translational management, helping to
Risk ensure stability and
profitability in an increasingly
globalized economy
Checkpoint
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Budgeting is the process of
NEXT TOPIC allocating particular resources
towards efficiency. We usually do
this unconsciously in managing our
weekly allowance as students.
ES
TH
S
However...
More factors are being considered in an international view of this concept. This revolves around
special nature of foreign or international capital budgeting.
Think of it
this way...
Inputs
Initial Price & Exchange
Investment Consumer Rates
Demand
Analyzes an investment or a
project’s profitability and
2
tackles the specified figures’
present value.
Formula:
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The shorter the Payback
Period is, the better. Formula:
(but it may not always be the case)
Payback Cost of Investment / Average
Annual Cash Flow
Period = Payback Period
Number of years when
investment is returned or the
1
time where the investment/
project reaches its breakeven.
ESVEE
On the other hand, the second project is set to earn P65,000 per year but costs less amounting
to P230,000. From the formula given, its payback period is 3.54 years.
If IRR > Discount Rate > 0, ACCEPT.
If IRR < Discount Rate < 0, DECLINE.
Internal
Rate of
1
Estimates profitability unlike
the Net Present Value which Return
focuses more on liquidity.
TAKE NOTE !
In contrast with the Net Present
Value, IRR calculates the annual
2
return that makes the NPV equal
to zero. Formula:
Financial
Management
Checkpoint
ARE YOU
READY?
As Accountancy Students...
RELEVAN
T
I
T?
IS
Assessment: MCQ
Adam Hayes, (2023, December 17), Money Markets: What They Are, How They Work, and Who Uses Them, Retrieved from:
https://www.investopedia.com/terms/m/moneymarket.asp
Chen, J. (2022, July 21). Exchange rates: what they are, how they work, why they fluctuate. Investopedia. Retrieved from: Exchange Rates: What
They Are, How They Work, Why They Fluctuate (investopedia.com)
Chris B. Murphy, (2024, March 5), Over-the-Counter (OTC) Markets: Trading and Securities,
https://www.investopedia.com/terms/o/otc.asp#:~:text=The%20OTC%20marketplace%20is%20an,capabilities%20of%20many%20smaller%20c
ompanies
Picardo, E. (2023, August 16). Exchange rate risk: economic exposure. Investopedia. Retrieved from: Exchange Rate Risk: Economic Exposure
(investopedia.com)
Kagan, J. (2020, October 17). What is International Finance, and Why Is It Important?. Investopedia. Retrieved from: What Is International
Finance, and Why Is It So Important? (investopedia.com)
Kagan, J. (2024, February 23). Payback Period Explained, With the Formula and How to Calculate It. Investopedia. Retrieved from: Payback Period
Explained, With the Formula and How to Calculate It (investopedia.com)
Publisher, A.R.a.r.O.O. (2016, June 17). 30.0 exchange rate systems. Pressbooks. Retrieved from: 30.3 Exchange Rate Systems – Principles of
Economics (umn.edu)
REFERENCES
Team, I. (2023, June 9). How does inflation affect the exchange rate between two nations? Investopedia. How Does Inflation Affect the Exchange Rate Between
Two Nations? (investopedia.com)
Twin, A. (2024, February 15). 6 factors that influence exchange rates. Investopedia. 6 Factors That Influence Exchange Rates (investopedia.com)
Team, C. (2023, April 3). Foreign exchange risk. Corporate Finance Institute. Foreign Exchange Risk (corporatefinanceinstitute.com)
(n.d.) Internal Rate of Return. Vedantu. Retrieved from: Internal Rate of Return - Explanation, Formula, Limitations, and FAQs (vedantu.com)
Global Financial Management: Navigating International Markets. FasterCapitals. Retrieved from: https://fastercapital.com/content/Global-Financial-Management--
Navigating-International-Markets.html#Understanding-International-Markets.
CrashCourse. (2015, November 20). Imports, Exports, and Exchange Rates: Crash Course Economics #15. YouTube. Imports, Exports, and Exchange Rates: Crash
Course Economics #15 - YouTube
Capital Budgeting: NPV, IRR, Payback | MUST-KNOW for Finance Roles by Kenji Explains. Retrieved from: Capital Budgeting: NPV, IRR, Payback | MUST-KNOW for
Finance Roles - YouTube
Capital Budgeting by Prof Karim Abitago. Real Excellence Online CPA Review. Retrieved from: Capital Budgeting by Prof Karim Abitago - YouTube